Civics Chapter 17
true
*TRUE OR FALSE* Capitalism is the main driving behind the American economy today.
false
*TRUE OR FALSE* Most countries that have a market economy have encouraged companies to create monopolies.
market economy
- Economic decisions are made by individuals looking out for their own and their families' best interests. Based on freedom. (USA has this economy) - Gov. doesn't tell people what to produce or buy - People can start businesses to make and sell any legal product(s) they wish. - Based on the economy, they can set their own prices. - Opposite of a command economy.
American Economic Freedoms
1) Freedom to compete 2) Freedom to own property 3) Freedom to buy/sell 4) Freedom of workers to compete for jobs 5) Freedom to earn profits
no
Are nonprofit organizations taxed by the government?
supply
Business owners hope the ______ & demand for a product will balance each other.
financially
Capital encourages people to invest their money so they can be successful ___________.
people buy less
Changes in prices are usually the result of supply & demand. As prices rise, the quantity demand falls. What does this mean?
improve
Competition drives companies to _______ their products.
creativity
Constant desire to improve products means innovation is also important. What is innovation?
Board of Directors chooses corporate officers
How are executives in corporations chosen?
Scarcity can work with the law of supply and demand because a scarce item will be held at a higher price, but people will want it at a lower price. That creates competition for stores.
How are scarcity and the laws of supply and demand connected?
Corporations raise money by selling stock. If the corporation fails and goes into debt, its property, buildings, and other valuables are sold.
How do corporations raise money, and how are the debts of a corporation paid if the corporation fails?
1) by selling stock 2) by selling bonds
How do corporations raise money?
The government might need to interfere with that business if it is the only one selling something, or has monopoly. They are related.
How do monopolies harm free enterprise?
Capitalism is linked to a market economy because people are free to buy and sell as they please.
How is capitalism linked to a market economy?
economic systems
How people obtain goods/services is what distinguishes different ________ _______ from each other.
compete
In order to provide a good/service they need resources in which individuals & businesses _______.
public utilities
In the U.S., monopolies except for certain ______ _________ are illegal.
- Responsibilities of each partner - Establishes how the partners will be paid if the business earns a profit
It's always a good idea in a partnership to have a written partnership agreement. What does an agreement outline?
late 1800s
Larger businesses began in the ____ _____. Today, they are essential to our economy.
weaken
Monopolies limit competition and ______ market economies.
donations
Most nonprofit organizations use _________ for individuals/ businesses to operate.
up
One result of this competition is scarcity, the lack of a particular resource. When the resource becomes scarce, it is harder to obtain. Products made from these resources then become difficult to obtain. Do the prices go up or down?
start
People are free to _____ a business and pursue a profit in market economies.
1) food 2) water 3) shelter 4) clothing
People need certain things to survive-basic things people cannot live without. What are those certain needs?
wants
People want many things not necessary for survival, but they can make your life easier, more comfortable, & more enjoyable. What are they more commonly known as? People satisfy these by obtaining goods/services.
essential
Profit motive is _________ to a successful market economy.
1) American Red Cross 2) American Heart Association 3) United Way 4) Girl Scouts/Boy Scouts
Some larger nonprofit organizations are often corporations. What are some examples of larger nonprofit organizations
business income
The federal government taxes what?
tries
The government _____ to keep the economy running smoothly.
protects
The government ________ a person's rights to own private property & to buy & sell in a free market.
discriminate
The government ensures employers cannot ____________ against workers or job applicants.
a federal minimum wage law
The government establishes what?
production levels
The government helps business by providing information to managers to use in planning their __________ ______, sales & costs
pollution
The government prevents _________ of the environment.
buyers
The government protects ______ from dishonest practices/harmful products.
health
The government protects a worker's ______ & safety.
loans
The government sometimes provides _____.
increase
The money you receive must be at least enough to cover all your costs. If it is more than enough, you will ________ your profits.
1) What are we going to produce? 2) How are we going to produce it? 3) For whom are we producing it?
What are 3 questions that businesses must ask themselves?
1) Government ensures that big corporations don't destroy competition from small businesses 2) Protects a person's rights to own private property and to buy and sell in a free market 3) The federal government taxes business income
What are some of the ways in which the government regulates business?
- There is more than one person to provide capital, share responsibility, ideas, & do the work. - Partners also share the risk. - If the business fails, the partners share the responsibility for the debts.
What are the advantages of operating a partnership?
- Sole proprietors are their own bosses • They decide the hours the businesses will be open • They decide how their business will operate - The owners take all the profits the business produces
What are the advantages of operating a sole proprietorship?
- Partners can lose their personal belongings if their business fails. - If partners disagree how to run the business, serious problems can result.
What are the disadvantages of operating a partnership?
- Owners must have or borrow all the money they need to rent or buy buildings or office space and equipment - If a sole proprietor hires help, he/she must be able to pay the employees - He/she is also personally liable for taxes
What are the disadvantages of operating a sole proprietorship?
1) State governments grant corporations the right to operate 2) Corporations must obey state regulations & file and pay taxes owed
What are the rights for a corporation to operate?
1) Loans from a bank 2) Loans from SBA 3) Selling stock
What are three ways people get capital for their businesses?
1) Stockholders elect the directors of a corporation 2) Every corporation is required by law to hold at least one meeting of stockholders a year.
What is important about a corporation's elected directors?
competition
What is vital when it comes to free enterprise?
1) Minimum wage laws (currently $7.25 in NC) 2) Discrimination (race, age, gender, etc.) 3) Natural environment (chemicals, pollution) 4) Worker's safety
While the U.S. has a market economy, the U.S. gov. does impose some regulations on businesses. What are the regulations?
the government
Who ensures big corporations do not destroy competition from small businesses?
Businesses need labor because they need people to work. More productivity happens where there is more hand labor.
Why do businesses need labor, and how are they affected by productivity?
The U.S. is described as a mixed economy because large businesses are free to operate as they want, but their operations must fall within regulations that the government have set up.
Why is the U.S. described as a mixed economy?
partnership
a business when two or more people share the responsibilities, costs, profits, and losses
monopoly
a company has this if it is the only one selling a product or providing a service
salary
a fixed earning
conglomerates
a large business made of smaller businesses joining together, this began in the 1900s
entrepreneur
a person who organizes, manages, and assumes the risks of a business
sole proprietorship
a small business owned by one person
corporation
a type of business that is recognized as a separate legal entity
labor
all human effort, skills, and abilities used to produce goods and services
capitalism
an economic system in which the productive resources-farms, factories, machines, and so on-are owned by private citizens
market economy
an economy in which economic decisions are made by individuals looking out for their own and their families' best interests
nonprofit organizations
business organizations that provide goods and services without seeking to earn a profit for stockholders, include: charities, scientific research associations, and organizations dedicated to cultural/educational programs
natural resources
can be found on or in the Earth or in Earth's atmosphere
dividends
corporate profits paid to stockholders
traditional economy
economic decisions are based on how economic activity has been carried out in the past
patent
exclusive right to make/sell your invention for a certain number of years
copyright
exclusive right to publish/sell a piece of writing, music, or art
command economy
government makes all economic decisions. Gov. owns or controls all capital, tools, & production equipment. North Korea and Cuba still have this
stockholders
people who buy corporate stocks
satisfaction chain
process of obtaining these goods/services to satisfy your wants
stock
shares of ownership
law of supply
states that businesses will produce more products when they can sell them at higher prices
law of demand
states that buyers will demand/want a greater quantity of a good when its price is low
productivity
the amount of work produced by a worker per hour
profit motive
the desire to make a profit
scarcity
the lack of a particular resource
capital
the manufactured goods used to make other goods and services
profit
the money a business has left after it has paid its expenses
free enterprise
the principle that business owners may operate however they see fit, with little direction or interference by government
free market
the right to buy and sell goods as you want
1) traditional economy 2) command economy 3) market economy
three basic types of economic systems
1) patent 2) copyright
ways to protect ideas
