Econ: Chapters 7-9

many

Perfect competition number of sellers

standardized

Perfect competition type of product

Franchise

a business made up of semi-independent businesses that all offer the same products. How it works?--> franchisee (an individual business) pay a fee to the parent business in return for the right to sell the company's product.

Soleproprietoship

a business owned by a single person, most common in the United States. YOU ARE YOUR BUSINESS

Corporation

a business owned by individuals (shareholders or stockholders). Stockholders own the rights to the company's profit, but are faced with limited liability for company's debts or losses. To acquire ownership you can purchase stocks or shares.

Cooperatives

a business that operates for the shared benefit of the owners, who are also the customers. -reasons: when people need the same goods band together and act as a business, they can offer lower prices by reducing profit. -consumer: can be small organizations, ex: country club. Require some kind of membership payment (labor or money). Keep prices low by purchasing good in bulk. -Service: are business organizations, ex: credit unions. Offer members service. -Producer: owners and operated by the producers of agricultural products. Join together to ensure cheaper, more efficient processing.

Natural monopoly

a market situation in which the costs of production are lowest when only one firm provides an output.

Oligopoly

a market structure in which only a few sellers offer a similar product, is less competitive than monopolistic competition. -a few large firms have market share — % of total sales in a market -dominate market -only a few because of start-up costs — the expenses that a new business must pay to enter the market and begin business

Monopoly

a market structure in which only one seller sells a product for which there are no close substitutes, price marker, high prices, unique products

Limited Liability partnership

a partnership in which all partners are limited partners and not responsible for the debts and other liabilities of other partners. -personal saving are not in risk, unless the debt arises from your own mistakes. -businesses that have malpractice (improper, negligent, or unprincipled behavior) cannot have LLPs. -fairly new so laws vary state-to-state -every one man for himself.

Standardized product

a product that consumers consider identical in all essential features to other products in the same market.

Limited Life

a situation in which a business ceases to exist if the owner dies, retires, or leaves the business for some other reason.

Unlimited Liability

a situation in which a business owner is responsible for all the losses, debts, and other claims against the business.

Nonprofit Org.

an institution that acts like a business organization, but its purpose is usually to benefit society, not to make a profit. -provide the goods or services free or minimal fee. or can promote common interests of their members. -structure resembles a corporation. -needs to receive money from the government. -has unlimited life -no taxes, because no profits, only services society. -raise most of their money from donations, grants, or membership fees, some sell good only for funds.

Profit

any left over money, after paying for the 4 factors of production.

Limited partnership

at least one partner is not involved in day-to-day running of the business and is liable only for the funds he has invested in. -there has to be one general partner that is liable for everything -then there can be limited partners (part owners) share in profits. -for all business -one person give money, then the others do the work

Conglomerate

companies combine that have nothing in common, no product or services in common.

Horizontal merger

companies that combine that have common products or services.

Vertical merger

companies that have different process of producing the products or services, but these products and services are the same.

Labor Union

is an organization of workers who collectively seek to improve wages, working conditions, benefits, job security, and other work relates matters. -power in numbers -mostly in north east because that is where most of the manufacturing was.

Product Differentiation

is the attempt to distinguish a product from similar products.

Perfect competition

is the ideal model of a market economy. Characteristics: -make no profit, but still make an income —> labor is still factored into costs (salaries) -don't make extra -don't make profit because of the market —> if make profit —> imbalance of the market = new business enter the market —> incomes are lowered = exit the market. -no advertisement

Collective Bargining

is the way businesses and unions negotiate wages and working conditions.

Merger

is when one company combines with or purchases another to form a single form.

Right-To-Work law

make it illegal to require workers to join unions.

Secondary level

manufacturing, produce good ex: once have wheat --> factory turns wheat into cereal

Monopolistic Competition

many sellers offer similar, but not standardized products. have to have product differentiation and non-price competition

many

monopolistic competition # of sellers

yes

monopolistic competition advertisment

fairly easy complete knowledge

monopolistic competition knowledge

limited

monopolistic competition sellers' control over prices

similar, but different

monopolistic competition type of product

one

monopoly # of sellers

no

monopoly advertisement

difficult perfect knowledge

monopoly knowledge

setter

monopoly sellers' control over prices

standardized, no substitutes

monopoly type of product

Franchise Advantages

more independence, provides good training in running the business (his success affect theirs). Advertising already paid for, and equipment/decor/furniture comes with the restaurant.

Primary level

natural resources, produce good ex: farm wheat

Price Fixing

occurs when businesses work together to set the prices of competing products.

few

oligopoly # of sellers

yes

oligopoly advertisment

incomplete knowledge, difficult to find

oligopoly knowledge

some, collusion/leadership

oligopoly sellers' control over prices

standardized (industry) different (consumers)

oligopoly type of product

Dividend

one can receive payment if the company does well and earns a profit, which is part of the profit that the company pays out to stockholders.

Civilian Labor Force (CLF)

people who are 16+ who are employed to actively looking for and available to do work.

no

perfect competition advertisment

easy perfect knowledge

perfect competition knowledge

none

perfect competition sellers's control over prices

Globalization

produce something in a difference place, and have it shipped back --> outsourcing, off-shoring.

Tertiary level

services ex: once have wheat --> general mills now sell the cereal (retail)

Stock

shares of ownership in the corporation.

Outsourcing

the practice of contracting with an outside company to provide goods or services.

Corporation Advantages

-Access to Resources: more ways to obtain money such as: selling bonds. -Professional Managers: lead to higher profits -Limited Liability: only loss what they invested in, nothing more. Business is a private entity. -Unlimited Life: if anyone dies, the business can continue to operate. -specialized management: departments —> efficiency

Wage rates

-human capital--education, skill, productivity -working conditions--dangerous and unwanted = higher -discrimination--glass ceiling, race -government action--minimum wage = Pro: you are being paid more, but Con: unemployment and more people looking for jobs.

Derived Demand

a demand for a product or resource because of its contribution to the final product

Trust

a group of firms combined for the purpose of reducing competition in an industry.

Multinational Corp.

a large corporation with branches in several countries.

General partnership

they share responsibility for managing the business and each one is liable for the losses or debts, but also success like profits. Unless there is a partnership agreement that specifies otherwise. -found in all businesses -split the debts and profits

Nonprice competition

using factors other than low price to try to convince customers to buy one product rather than another, for example: style, service, advertising, or giveaways.

Contingent Employment

work that is part-time or temporary.

Cartel

is a formal organization of sellers or producers that agree to act together to set prices and limit output (monopoly).

Corporation Disadvantages

-Start-Up Cost and Effort: process of setting up corporation is more time consuming, difficult, and expensive compared to partnership. You have to sign article of incorporation: legal contract with the government, so the government keep track of you (keep eye on you). You can only perform the activity that you said you would in the article. -Heavy Regulation: difference between public and private. Public has regulations such as: annual reports for the Securities and Exchange Commission, government agency oversees the sale of stocks, and has quarterly financial reports for stockholders, and hold yearly meetings for its stockholders. -Double Taxation: there are taxes on profits for the officers of the company, and they are also stockholders so they pay another tax on dividend income. Two different incomes. -Loss of Control: other board of directors (power/runs) can out vote the owners. Wealthy people with lots of stocks vote, for board of directors.

CLF changes

-commuting --> telecommuting -contingent employment --> transient workforce: a person who has had a lot of jobs because cannot find steady one -individuals are a commodity, no loyalty -more women, and technology (work from home) -globalization

Wages

-derived demand --> we only want labor because we want products -Supply = "necessity" --cost/benefit of time effort, survival or your labor -individual provides labor

Partnership Advantages

-easy to open and close -few regulations -access to resources: attract more employees -joint decision making: better decisions, brings more perspectives and thought process to the table. -specialization/combination of skill: promote efficiency, divide labor. -easy to raise money

Soleproprietoship advantages

-easy to open to close: usually only need: funding, a license, a site permit, and a legally registered name. also need to pay all bills. -few regulations: usually the only regulations are: store is in an area zone (officially set aside area) and treat employees according to labor laws. -freedom and control: leads to personal satisfaction being your own boss. -owner keeps profit -lower tax

Soleproprietoship Disadvantages

-limited funds: trouble to secure a bank loan, no monetary reserves to "fall back on" tough. No experience, not enough friends and family to help, no access to people with a lot of money that invests in money. to pay competitive wages, or benefits i.e. health care. more likely to fail. -limited life -unlimited liability: could lead if business fails to losing more property than before such as: car, house, personal savings. No limit what they can take from you. YOU ARE YOUR BUSINESS -risk of loss

Partnership Disadvantages

-unlimited liability: person suing you get twice as much (in general partnership) -potential for conflict: disagreement, need approval of all. -limited life -profits shared

Franchise Disadvantages

invest a lot of money, no assurance of success, share profits, no control over business.

Deregulation

involves actions taken to reduce or to remove government oversight and control of the business.

glass ceiling

describes these unseen barriers to advancement

Government monopoly

government either owns or runs the business or authorizes only one producer.

Geographic monopoly

here are no other producers or sellers within a certain region. -ex sports team: only one team for that surrounding area, so the sports team can have higher prices. -physical isolation

Quaternary level

information systems ex: data analysis, banking, stock brokers