unit 3

Question 1

An establishment formed to carry on commercial enterprise.

Answer 1

Business Organization

Question 2

3 main types of business organzation

Answer 2

Sole Proprietorship
Partnerships
Corporations

Question 3

Def: a business org. owned and managed by a single individual

Answer 3

sole propietorship (business organzation)

Question 4

Ease of start-up
Relatively few regulations
Sole receiver of profit
Full control
Easy to discontinue

are all advantages of ___ (business organzation)

Answer 4

sole propietorship

Question 5

Unlimited Personal Liability: Owner is legally bound to pay all business debts.

Limited Access to Resources: Lack of money, capital, etc prevent sole proprietorships from becoming large.

Lack Permanence: when the owner closes shops, retires etc, the business ceases to exist.

these are all disadvantages of ______ (business organzation)

Answer 5

sole propeitor ship

Question 6

Def. business owned by two or more people who share responsibility and liability for the business

Answer 6

partner ship (business organzation)

Question 7

Ease of start-up

Shared decision making and specializations- Partners divide workload and skill to business

Larger pool of capital– partners both invest funds into the business

Taxation: Partners pay their own taxes, but the business does not

are all advanatges of ______ (business organzation)

Answer 7

partnership

Question 8

Partners are bound by each other’s actions (i.e. if your partner makes a stupid mistake, you are stuck with it!)

Potential for conflict- arguments disputes can cause major problems
At least one partner has unlimited liability

are all disadvantages of ______- (business organzation)

Answer 8

partnership

Question 9

A business that is a legal entity (it exists on its own with rights like a person) owned by individual stockholders

Answer 9

corporations (business orgnzation)

Question 10

sometimes called shares, represent a stockholder’s portion of ownership of a corporation

Answer 10

stock

Question 11

Advantages for the ___

Do not carry responsibility for corporation’s actions (corporations does something illegal or owe debt, stockholders are not responsible)

Shares of stocks are transferable, they can be sold to others for a profit.

Answer 11

stockholders (corporations/business organzation)

Question 12

Advantages for the _______
Have potential for more growth than other business forms

Can borrow money by selling bonds

Can hire the best labor (human resources) and best equipment (capital resources)

Have long lives

Answer 12

corporation (business organzation)

Question 13

Difficult and expensive to start up

Double Taxation (the corporation must pay taxes on income and stockholders pay taxes on profit)

Loss of control (managers and board members control, not the owner)

More regulation (government regulates more than any other bus. org.)

are all disadvantages of ___

Answer 13

corporation (business organzation)

Question 14

___are combinations of two or more corporations into a larger corporation.
Watched by the government—no monopolies.

Answer 14

Merger (3 types)

Question 15

____Merger: combination of 2 or more corporations who provide the same good or service (ex: Cingular and AT&T)

Answer 15

horiziontal

Question 16

____Merger: Combine 2 or more firms involved in different stages of producing a good or service. (ex: Carnegie Steel owned the Iron mines and Steel Refineries)

Answer 16

vertical merger

Question 17

____merger: a combination of 3 or more businesses making unrelated products. (ex AOL (Internet) Time (news magazine) Warner (TV and movies)

Answer 17

Conglomerate

Question 18

_____:Large Corporations headquartered in one country with subsidiaries (smaller branches) throughout the world.

Advantages: Offer products worldwide, spread technology and jobs around the global.

Disadvantages: Influence cultures of other countries with little worker protection (sweatshops, and pollution)

Answer 18

multinational corporations

Question 19

___:A semi-independent business that pays fees to a larger parent company in return for the right to sell a product or service.

Ex. McDonalds, 7-11, Pizza Hut

Pay money to use the name, symbols, and for help in running the store/restaurant/etc.

Answer 19

franchise

Question 20

Management and Training support
Standardized quality
National advertising programs
Financial assistance
Centralized buying power

are all advantages of _____

Answer 20

franchises

Question 21

Def: a description of the type of market that a particular business or industry operates in.

Also know as Market Structure.

Answer 21

models of competition

Question 22

Perfect competition
Monopoly
Monopolistic competition
Oligopoly

are all types of____

Answer 22

competition

Question 23

Def: A market structure in which a large number of firms (businesses) produce the same product

Answer 23

perfect competition

Question 24

1. Many buyers and sellers- people have lots of options to choose from when they buy.
2. Identical products – No difference in items they are exactly the same

.3.Informed buyers and sellers- buyers know the prices and qualities of goods.

4. Free market entry and exit- Business can enter and exit the market when they want

are all ____-

Answer 24

condtitions for perfect competition

Question 25

types of ____: Farmer’s Market - Have many buyers and sellers - Veggies are identical (a carrot is a carrot) - Buyers can compare prices and quality (informed) - Farmers decide to go or not

Answer 25

business

Question 26

Def- Factors that make it difficult for new firms to enter a market Start up costs- costs needed to create and enter a market (rent, machines, labor) Technology- (ex: software and pharmaceutical companies)

Answer 26

barriers of entry

Question 27

Def: A market dominated by a single seller.

Answer 27

monoply

Question 28

____-:Allowed to exist because the market runs better with just one firm

Answer 28

natural monopoly

Question 29

_______:Licenses that give inventors exclusive rights to sell their product for a time.

Answer 29

patents

Question 30

Def: Many companies compete in an open market to sell products that are similar but not identical

Answer 30

monopolistic competition

Question 31

1. Many firms- little start up costs=lots of firms 2. Few artificial barriers to entry- low barriers 3. Slight control over price- can raise prices because products are a little different. 4. Differentiated products-Can distinguish their product from others are all ____

Answer 31

conditions for monopolistic competition

Question 32

______ a way to attract customers through style, service or location but not a lower price.

Answer 32

nonprice competition

Question 33

1. Characteristics of Goods: Firms distinguish products through size, color taster etc. 2. Location of Sale -Convenience stores 3. Service Level- Can charge higher price because they offer a higher level of service. Ex McDonalds vs Fancy rest. 4. Advertising Image- Advertising creates differences between products are all ___-

Answer 33

4 types of nonprice competition

Question 34

Def: A market dominated by a few, large firms Ex: Cartels OPEC (Organization of Petroleum Exporting Countries)- Countries that control the oil supply and manipulate prices of gas

Answer 34

oligolpoly

Question 35

___--:Agreement between members to set prices and production levels

Answer 35

collusion

Question 36

_______:Agreement to sell at the same or similar prices

Answer 36

price fixing

Question 37

Def: the ability of a company to control prices and output Markets dominated by monopolies and oligopolies have great market power Markets with many sellers (mono and perfect comp) have little to no market power

Answer 37

market power

Question 38

Def- setting the market price below cost levels for the short term to drive out competitors. Firms in perfect comp. and mono comp. do this to gain market power Ex: Open up my pizza shop and sell slices for $1 even though it costs $1.50 to make. I can raise the price later if I drive out competition.

Answer 38

predatory pricing

Question 39

Regulating Business Practices-gov’t intervenes if too powerful Breaking Up Monopolies- (Standard Oil AT&T) Blocking Mergers- Can stop them Preserving Incentives-must show benefits to consumer are all ________

Answer 39

4 forms of anti-trust laws

Question 40

Def: The removal of some government controls over a market. It is used to promote competition. Allows for more competition, lower prices, increase in variety but can lead to layoffs and business closings EX: Airlines in the 80’s

Answer 40

deregulation

Question 41

an organzation of wrokers that tries to improve working condtions, wages, and benefits for it's members

Answer 41

labor union

Question 42

the process where union and company reps meet to negotiate a new labor contract

Answer 42

collective barganing

Question 43

a settlement techinque in which netural mediator meets with both sides and suggests a solution for both sides, non binding

Answer 43

mediation

Question 44

a settkement techinque in which a third party (aribitrator) rewviews the case and imposes a descion that both sides have to accept

Answer 44

aribitration

Question 45

in order to put pressure on mangament unions tell workers to work as little as required by contract

Answer 45

work slow down