Economics:Competency 2B

  1. What are the number of businesses in Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly?
    • Perfect Competition- Many
    • Monopolistic Competition- Many
    • Oligopoly- few sell majority of products
    • Monopoly- one
  2. Barriers to entry for Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly?
    • Perfect Competition- none
    • Monopolistic Competition- low
    • Oligopoly- high
    • Monopoly- very high
  3. Product differences of for markets?
    • Perfect Competition- none
    • Monopolistic Competition- some
    • Oligopoly- some
    • Monopoly- none
  4. What are forms of competition between four markets?
    • Perfect Competition- lower prices
    • Monopolistic Competition- lower prices, ads, R&D
    • Oligopoly- ads, R&D
    • Monopoly- ads, R&D
  5. What are examples of Perfect Competition?
    wheat, corn
  6. What is an example of monopolistic competition?
    pizza places in Concord
  7. What are two examples of oligopoly?
    • phone companies
    • airline companies
  8. What would happen if there was there was price competition in oligopolies?
    a price war would begin
  9. What are two examples of monopolies?
    • Cable TV
    • Local Utilities
  10. What is the Law of Demand?
    The higher th eprice the smaller the quantity demanded?
  11. What are complements?
    price of products used together
  12. What are the five components besides price in the Law of Demand?
    • Income
    • Substitutes
    • Complements
    • Tastes&Preferences
    • Expectations
  13. What is the Law of Supply?
    The higher the price the larger the quantitiy supplied
  14. What are the two components in the Law of Supply besides prices
    • Costs to produce product
    • Expectations
  15. What is equilibrium?
    When quantity consumers are willing and able to buy equals the quantity that producers are able and willing to sell.
  16. What is surplus?
    When quantity supplied exceeds demanded.
  17. What is shortage?
    When quantity demanded exceeds quantity supplied.
  18. What is one advantage and disadvantage of sole proprietorships?
    • advantage- owner keeps all profit
    • disadvantage- unlimited personal liability
  19. What is the difference between gereral partnerships and limited partnerships?
    • general- liability is shared
    • limited-one person has full liability
  20. What is an advantage and disadvantage of partnerships?
    • higher ability to raise finaicial capital
    • profits must be shared
  21. What is a corporation?
    Legal entity. Has legal rights and responsibilties as if it were a person.
  22. What are the three steps to becoming a coporation?
    • 1) get state charter
    • 2) issue stocks
    • 3) elect board of directors
  23. what are two adavantages and two disadvantages of corporations?
    limited liability, skilled specialized management

    owners have less control, double taxation
  24. What is a franchise?
    A business granted the right to sell a company's products in a certain area
  25. What is collusion?
    Agreement in which companies restrict production to raise prices and profits.
  26. What is the difference between Vertical, Horizontal and Conglomerate Mergers?
    • Vertical- combo of companies in different steps of production
    • Horizontal- combo of companies in same business
    • Conglomerate- combo of unrelated companies
  27. What are the four Ps in marketing?
    • Product
    • Price
    • Promotion
    • Place
  28. What is Merket Supply?
    The total of all individual products in a market.
  29. What happens to the price of a product in a shortage?
    It goes up
  30. What happens to the price of a product in a surplus?
    It goes down
  31. What is the SEC and what does it do?
    Security and Exchange Commission. It protects investors in the sale of stocks and bonds.
  32. What does the invisible hand refer to?
    the fact that market finds equilibrium price through the independent and voluntary actions of buyers and sellers
Card Set
Economics:Competency 2B