ECONOMICS Chapters 3&7 Test

In a perfectly competitive market, products must be ___________.

IDENTICAL

Corporations are able to borrow large sums of money by ______________.

INVESTING

A market structure categorized by few sellers is called an __________.

OLIGOPOLISTIC MARKET

When only a few producers and their products dominate an industry, the market structure is called ______________.

OLIGOPOLY

Bondholders are different from stockholders because they _____________.

OWN BONDS

A ______________ market has many buyers and sellers that all sell identical goods.

PERFECTLY COMPETITIVE

In what market structure are sellers price takers?

PERFECTLY COMPETITIVE

A seller that can sell its goods only at the equilibrium price would be considered a ___________.

PRICE TAKER

A major difference between perfectly competitive markets and monopolistic competitive markets is that with monopolistic competition there is _____________.

PRODUCT DIFFERENTIATION

A business owned by one individual who makes all the business decisions is called a ____________.

PROPRIETORSHIP

_____________ is the additional cost of producing one more unit of a good.

MARGINAL COST

____________ is the income received from selling an additional unit of a good.

MARGINAL REVENUE

Economists categorize businesses into ________, which are defined by characteristics such as the amount of competition, the ability to set price, and the ease of entry.

MARKET STRUCTURES

Economists believe that the major goal of each firm is to _________________.

MAXIMIZE PROFIT

The market structure that consists of one seller who sells a product that has no close substitutes is called a _________.

MONOPOLY

When a single producer has complete control over one kind of good or service, the market structure is called ______________.

MONOPOLY

A _________ occurs when one firm's low average total cost or one firm's exclusive ownership of a resource prevents competition.

NATURAL MONOPOLY

When it comes to determining price, sellers in a perfectly competitive market have ___________.

STANDARDIZED PRODUCTS.

Who are the owners of a corporation?

STOCKHOLDERS OR SHAREHOLDERS

All four types of market structure have similarities, including the fact that each of them have buyers and sellers.

TRUE

An advantage of franchise ownership is the national advertising provided.

TRUE

Barriers to entry limit potential competition.

TRUE

Business firms want to maximize profit.

TRUE

Firms in a monopolistic competitive market are price searchers.

TRUE

In some towns, cable television providers and trash collectors are monopolists.

TRUE

It is difficult for sole proprietorship to raise funds for business expansion because lenders are not eager to lend money to a business that depends upon one person.

TRUE

Profit attracts new firms into the perfectly competitive market.

TRUE

Sellers in a perfectly competitive market can charge the equilibrium price and sometimes slightly higher than equilibrium price for their product.

TRUE

Sole proprietorships are easy to form and to dissolve.

TRUE

The board of directors is responsible for choosing a corporation's president.

TRUE

Their is ease of entry into a monopolistic market.

TRUE

The disadvantage of a proprietorship that could directly affect the owner's personal assets is __________.

UNLIMITED LIABILITY

The disadvantages of a partnership include _____________.

UNLIMITED LIABILITY, DIVISION OF PROFITS, DISAGREEMENTS, AND DIFFICULTY OF TERMINATION.

What is a fixed cost?

A COST THAT DOES NOT CHANGE, NO MATTER HOW MUCH OF A GOOD IS PRODUCED.

What is a variable cost?

A COST THAT VARIES WITH THE LEVEL OF OUTPUT.

Laws meant to control monopoly power and to preserve and promote competition are referred to as ___________ laws.

ANTITRUST

A ________ is a legal entity that can conduct business in its own name in the same way an individual does.

CORPORATION

Firms protected from competition by public franchises, patents, or copyrights are called ________________.

BARRIERS TO ENTRY

Things such as patents or copyrights, which make it difficult for a new business to open in a particular market, are considered ______________.

BARRIERS TO ENTRY

Maximizing profit is the goal of _______________.

BUSINESS FIRMS

A business organization that can conduct business in its own name and can own property as if it were an individual is a _________________.

CORPORATION

A ___________ is formed when firms decide to act in a coordinated way to reduce the competition among them and raise their profits.

CARTEL AGREEMENT

The advantage of a sole proprietorship include ______________________.

EASE OF START UP, FEW REGULATIONS, SOLE RECIEVER OF PROFITS, FULL CONTROL OF BUSINESS, AND EASY TO DISSOLVE

Purchasing a franchise is a sound economic decision that guarantees financial success.

FALSE

Sole proprietorships account for the largest percentage of total business receipts.

FALSE

There are large barriers to entry in the monopolistic competitive market.

FALSE

When there are few firms in a market structure, the firms are considered price searchers.

FALSE

Anything of value to which a firm has legal claim is a ________________.

FIXED ASSET

An expense that does not change as output changes is considered a _____________.

FIXED COST

A __________ is the person or group that buys a franchise.

FRANCHISEE