Entrepreneurship Chapter 2 Review

Oligopoly

Exists when a market is dominated by a small number of businesses that gain the majority of total sales revenue.

False

When a business continually adds extra workers, output is sure to increase as well.

Never end

Your needs and wants....

A monopoly

... Exists when there is only one provider of a product or service

Economic Resources

.... Are the means through which goods and services are produced

Economic

....... Wants involve a desire for material goods and services

1. Which ones will be produced? 2. How will they be produced? 3. Whose needs and wants will they satisfy?

All economies must answer three basic questions. What are they?

Marginal

Cost measures the disadvantages of producing one additional unit of a good or service

Production occurs the way it has always occurred. It is used in countries that are less developed because whatever is not consumed is sold or traded with people who live in nearby communitites.

Define and describe a traditional economy. What nations are most likely to have traditional economies? Why?

The economic resources that are used in order to create useful goods and services

Define the term factors of production

A. Self-Actualization

Earning a college degree would belong in which stage of Maslow's hierarchy of needs?

False

Economies are based on both economic and noneconomic wants.

False

Economists make no distinction between a WANT and a NEED.

True

Entrepreneurs invest in their communities by contributing to the local economy and by providing jobs.

False

Entrepreneurship thrives in a command economy.

True

Food, sleep, water, shelter, and air are all examples of physiological needs.

False

Generally, as the price of a product decreases, demand will also decrease.

1. Natural- Raw materials that are produced by nature 2. Human- people create goods and services 3. Capital- Assets used in production

Identify and describe the three factors of production used by entrepreneurs.

Command

In a ... economy, the government determines what, how, and for whom products and services are produced

Market Economy

Individuals and businesses decide what, how, and for whom goods and services are produced in a..

True

It is much easier for a business to enter a market with perfect competition than it is to enter an oligopoly.

1. Physiological 2. Security 3. Social 4. Esteem 5. Self-Actualization

List the stages of Maslow's hierarchy of needs pyramid

true

Mixed economies often result when countries shift away from command economies toward market economies.

False

Opportunity cost is the price an entrepreneur pays to have the opportunity to go into business-- usually involving fees and startup costs.

Scarcity

Occurs because people's needs and wants are unlimited but the resources to meet those needs and wants are limited

Specialization

Occurs when individual workers focus on single tasks, enabling each worker to become more efficient and productive

False

Only advanced economies have the resources necessary to satisfy all of the ants of all people for all material goods and services.

Private Property, Freedom of Choice, Profit, and Competition

The U.S economic system is based on four principles. Name them.

Profit

The difference between the revenues earned by a business and the costs of operating a business is called...

True

The four interdependent functions of business are production, marketing, finance, and management.

True

The price at which supply equals demand is the equilibrium price.

False

The primary reason a business exists in a market economy is to provide employment for members of the community.

Capitalism

The private ownership of resources by individuals rather than the government is called

Demand

The quantity of a good or service that consumers are willing to but at a given price is called..

True

The rent a business owner pays for office space is an example of a fixed cost

Marketing mix

The..... consists of product, distribution, price, and promotion.

The cost of advantages obtained due to expansion

What are economies of scale?

Goods= Products can be seen and touched Services= Acts for someone else

What is the difference between goods and services

If one factor of production is increased while others stay the same, the resulting increase in output will level off after some time and then will decline.

What is the law of diminishing returns?

Finance

Which business function would be concerned with determining the amount of capital needed for the business and how the capital will be obtained?

Psychologist. People's basic physiological needs must be satisfied before they can focus on higher level needs and so on up the levels.

Who was Abraham Maslow? Describe the ideas behind Maslow's hierarchy of needs.