M2 Study guide

Question 1

cartel

Answer 1

organization of producers established to set productions price for product

Question 2

describe a monopolistic competition

Answer 2

may producers

different products

barriers to entry

Question 3

Hoe do economies of sclae help larger buisnesses

Answer 3

LArger buisness will set their products & make more profit

Question 4

economies of scale

Answer 4

proportionate saving in costs gained by increased level of production

Question 5

Partnership(s)

Answer 5

buisness run by two people

Question 6

3 advantages of a sole proprietorship

Answer 6

Easy to start up

Owner keeps all profits

doesnt have to pay sperate buisness taxes

Question 7

Corporation

Answer 7

form of buisness organization recognized by law as a seperate legal entity

Question 8

Describe the role of the government in maintaining compettition

Answer 8

Passed laws limiting monopolies; mergers

Question 9

3 disadvantages of a proprietorship

Answer 9

Raising finacial capital

unlimited liability

limited life

Question 10

3 advantages of a partnership

Answer 10

sharing of profits

ease of start up

ease of management

special legal status

Question 11

conglomerate

Answer 11

combines two or more unrelated firms

Question 12

14th admendment

Answer 12

gives buisness legal support

(property owned by a buisness)

Question 13

concentration ratio

Answer 13

total percentage of top four producers in an industry

Question 14

If monopolies are so bad, why does the gov. allow some to exist

Answer 14

Monoplies can produce neceasary services @ a reasonable price to consumers

Question 15

3 advantages of a corporation

Answer 15

easy to raise financial capital

ease of transferring ownership of corporation

unlimited life

Question 16

3 disadvantages of a franchise

Answer 16

might have to pay back franchise

dont provide high quaility products of cleanliness

spenning millions of money

Question 17

Horozotal merger

Answer 17

combines two firms in an industry producig/selling same product

Question 18

3 disadvantages of a partnership

Answer 18

Each partner is fully responisble for acts of all other partners

limited life

potential for conflict beteen partners

resposible of debts

Question 19

market share

Answer 19

percentage produced by one company in an industry

Question 20

Monopolistic competion

Answer 20

has all characteristic of perfect competition except product diffenfentation

Question 21

How does the 14th admendment help buisnesses

Answer 21

gives legal suport, allowing buisness to own property

Question 22

Would the gov. allow (Department of Justice) allow Keloggs and General Mills to merge? Why not?

Answer 22

NO b/c the concentration ratio is 60% which isnt allowed

Question 23

What are two advantages of franchises over sole proprietorships

Answer 23

National Advertising, reduces risk asscociated w/ sale

Question 24

Perfect competition

Answer 24

large # of well informed independent buyers and sellers who freely exchange identical products

Question 25

Describe the role of the gov. in preventing deceptive advertising

Answer 25

FTC

Question 26

unlimited liability

Answer 26

owners personally & fully resposible for all losses and debts of buisness

Question 27

Describe the role of the gov. in ensuring fair pricing

Answer 27

Depatment of Justice requlates

Question 28

What does the department of justice seek to maintain?

Answer 28

Competitive markets so consumers can get, low prices, variety of products, better quality goods, convenience and service, innovation in the market, truth in advertising

Question 29

Laissez faire

Answer 29

belief that the gov. shouldnt interfere with buisnesses

Question 30

Why does advertising play no role in either perfectly competitve markets or monoploies

Answer 30

no matter what, a consumer will have to by a certain product because there are no subsitutes

Question 31

non price leadership competition

Answer 31

using product diffrentiation & advertising to attract customers

Question 32

price leadership

Answer 32

dominant firm sets price and other smaller buisness follow

Question 33

Monoploly

Answer 33

one one seller for a particular product

Question 34

3 advantages of a franchise

Answer 34

right to use company name, personael, national ads buy to succsessful company make money agreement to franchise reduces risk associated with sole prorietorship

Question 35

Oligopoly

Answer 35

few very large sellers dominate the industry

Question 36

Which buisnnes is the easiest to start

Answer 36

Proprietorship

Question 37

vertical merger

Answer 37

combines companies in two different industries producing different goods

Question 38

limited liability

Answer 38

owner's has some responsibilty

Question 40

Sole Proprietorships

Answer 40

Buisness owned and run by one person with all rights to all profits and unlimited liabilty for all debts of the firm

Question 41

Which buisness type earns the greatest amount of profits

Answer 41

corporation

Question 42

double taxtion

Answer 42

Taxtion of dividends both corporate profit and personal income

Question 43

Sherman Anti-trust-Act

Answer 43

No one is allowed to make any kind of agreement, conspiracy or any combination to restrain tade/fixed prices

Question 44

collusion

Answer 44

producers get together and make agreements on production levels and prices

Question 45

Stock

Answer 45

certificate of ownership in a corporation

Question 46

3 disadvantages of a corporation

Answer 46

must keep detailed sales and expense records double taxtion owners share holders have little voice in how buisness is run

Question 47

Franchise

Answer 47

Contract which a corporation allows a person/group to use payments an meet certain requirements