Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

AP Government and Economics > Unit 2: Microeconomics > Flashcards

Unit 2: Microeconomics Flashcards

(63 cards)

Start Studying
0
Q

Partnership

2 or more owners

A

General- Equal owners
Limited- One owner has over 50% of business (general partner)
Silent- Money only (no say)
Nominal- Name only
ADVANTAGES
Share the risk, share the work + decisions (designate a managing partner), easier to open 2nd location
DISADVANTAGES
Potentially unlimited liability (up to % owned! unless others cannot pay), no contract required (can have miscommunication, lost relationships), may not have right of 1st refusal (buyout)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

Sole Proprietorship

A 
One owner
*Most common
Sell own skill/idea
*Franchise owners
ADVANTAGES
Easiest to open (minimal requirements), make all decisions, keep all profits, *most likely rags to riches
DISADVANTAGES
Hardest to get financed (loans), most likely to fail, limited life, unlimited liability (can lose personal assets)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Corporation

3 or more owners

A

File articles of incorporation (charter) with the gov’t
*Considered to be a legal entity (“person”)
ADVANTAGES
Can sell shares of stock (%ownership), limited liability (can only lose business), can sell corporate bonds, unlimited life, expand nationally/globally
DISADVANTAGES
Can lose control of the business (limited to 49% ownership)’ double taxation (corporate income tax [39.6%]), regulated by the SEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Franchise Owner

A

Limited partnership between a sole proprietor and a corporation

  • Agree to use corporate supplies, etc. (Day to day decisions are sole proprietor’s)
  • Guarantee an exclusive area
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Mergers and Acquisitions (hostile take over)

A
  1. Horizontal combination/merger
    * Join with competitor to reduce competition and gain market share (power)
    - DOJ approval
  2. Vertical combination/merger
    * Companies in the supply chain join (steps of production) to reduce costs (become more efficient)
  3. Conglomerate/Conglomeration
    * Parent company (3 or more) owns product lines (unrelated co.) in different industries
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Nonprofit Business

A

*No single owner to profit from
*tax exempt status (no corporate tax)
TYPES
1. Nonprofit Association
-Church, charity, school, clubs, political parties, advocacy groups (“special interest”)
2. Co-operative (member owned to benefit members equally)
-Farm, labor union, credit union, NFL
3. (Subsidized or Controlled) Government/ Public Corporation
-USPS, PBS, Federal Reserve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Commercial Business

A

For profit to owner/shareholders (stockholders)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Commercial Structure

A

Common stock (share holders)- publicly traded, 1 vote/share, May or may not get dividend
V
Board of Directors ->Chairmen of Board- mergers, acquisitions, divestment decisions
V (hire)
CEO- *runs the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Common Stock

A

Share Holders
Publicly traded
-1 vote/share
-May or may not get dividend

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Preferred Stock

A

Board of Directors
CEO, COO, CFO
-No vote
*Guaranteed Dividend (share of profits)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Stock Market

A

Buyer- Investor
Seller- IPO (initial public offering) by corp
Product- Shares of ownership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Labor Market

A

Buyer- Employers: firms (private sector) or gov’t (public sector)
Seller- Individual worker
Product- Human resources; skill, education (time)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Competitions

A

Pure/perfect competition- Identical skills/product
^ Many sellers, no one has market effect
v
Monopolistic competition- *Most jobs have many (job specific req.) qualified applicants (substitutes)
|
Oligopoly- Few people have skill/education *Specialized
| ($)
Monopoly- Actor, artist, athlete (unique skill)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Unskilled Labor

A 
No skill/education requirement (on job training)
PAY
Minimum wage
BENEFITS
Earn them/few
AUTONOMY
No power
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Semiskilled Labor (union jobs)

A 
Up to 2 years of training or certification
PAY
Wage
BENEFITS
Employee only
AUTONOMY
Little/can advance
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Skilled Labor (union jobs)

A 
Up to 5 years training, and/or apprenticeship + license 
PAY
High wage
BENEFITS
Varied
AUTONOMY
Most power/independent contractors
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Professional/Managerial (work up through company) Labor

A 
College degree 4 years or more
PAY
Salary
BENEFITS
Best benefits (paid leave, conveniences, pensions/retirement (401K) 
AUTONOMY
Varies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Economic Rent

A

Potential/increased value of a resource

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Labor Union

A

Organized group of workers who negotiate collectively (strength in numbers)
AFL (American Federation of Labor)
-Union of skilled unions
*Political bloc/advocates
CIO (Congress of Industrial Organizations [unskilled])

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Collective Bargaining

A

Union representatives secure one contract for all workers

  • Salary schedule/union contract
  • Sv Wages^ (inverse)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Wagner Act

A

Protects the right it form a union

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Taft-Hartley Act

A
  • Right to work states

* Cannot be forced to join a union

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Unemployment Rate

A

in labor force looking for a full time work
_____________________
Total # in labor force

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Labor Force

A 
Civilians (not in military) 
16-65 years old
Willing and able to work
Have or looking for 30 hr/wk job (full time)
Not a full time student

Labor participation rate= 62.8%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Cyclical Unemployment
Laid off because of slow economy * Based on business cycle (boom and bust-> recession -> depression) - Most common- * Qualify for unemployment benefits (insurance)
25
Seasonal Unemployment
* Job ends, restarts every year (discontinuous) | * Not counted in unemployment rate
26
Frictional Unemployment
I between jobs -> quit, graduated, new entrants to job market *Normal (always have) 5% = "Full Employment"
27
Structural or Technological Unemployment
Economy changed - Replaced by a machine - Automation - Skill set is not in demand - Job outsourced *Qualify for benefits
28
Cost
What the seller/producer pays to make the product available v *Explicit Costs= Monetary costs (actual out buy of money) -Implicit Costs= Opportunity costs (value of next best option)
29
Fixed Costs
Do not change with level of production (output) - Sunk costs, opening costs, overhead - Example: , rent/lease/mortgage, capital equipment, insurance, taxes, permits,
30
Variable Costs
Change with the level of production * MUST pay VC or no product to sell (marginal revenue) - Example: *Wages, raw materials/supplies, employee benefits
31
Total Cost
TC=FC+VC
32
Average [total/fixed/variable] Cost
? Cost/Quantity of ?
33
Marginal Cost
``` Additional costs for additional inputs to produce (one) more products (Marginal) Additional Product= ΔQ ΔTC/ΔQ OR ΔVC ```
34
Total Revenue
Price x Quantity TR - TC = profit
35
Marginal Revenue
Price [if quantity is one] | ΔTR/ΔQ
36
Marginal Revenue Product
ΔQ x price
37
Marginal Revenue Product of Labor | MRPL
Why should you be hired? ΔQ from ΔLabor ΔQ x price
38
MR.DARP
Marginal Revenue = Demand = Average Revenue = Price
39
Marginal
Additional = Δ in? | *Subtract! When ΔQ=1
40
Short Run
Current production cycle (now
41
Long Run
Continuous production (now + future) LRACurve = Tangent to low point on SRACurve Dis economy of Scale: AC^ Production^ Economy of Scale: ACv Production^
42
Predict Quantity?
``` PDMU (demand?) + PDMR (cost of input vs output) AVC > AR 1. Shut down (temporary) 2. Exit (go out of business) MC=S AVC < AR 1. Stay producing ```
43
Normal Profits
* Willing to keep business open * Intangible benefits * Implicit costs
44
Labor Market | Buyers and Sellers
Buyers: employers Private sector- firms *Wages v Costs v Public sector- gov't ``` Seller + product -Skill set and/or education *Specialization = Wages^ Why work? -Money vs. time -Income effect -Satisfaction of job (utility) -Substitution effect (trade off) ```
45
Monopsony
Buyer has control of the market (maybe only buyer)
46
Monopsonist
- Overprice - Maybe on quantity/quality * Walmart * US gov't
47
GDP
Gross Domestic Product National income measurement Economic growth = 2-3% increase annually = normal growth
48
Gross Income
[Part of GDP] - Before voluntary and involuntary deductions - Retirement (pretax 401K) [VOLUNTARY] - Income tax [INV] - HSA/HDMSA (medical savings account) [VOL] - Social Security [INV] - (State Retirement) Public Sector job [INV]
49
Net Income
- After all deductions/pay check -> used for economic needs (normal consumption) - Real income (adjust for inflation) = purchasing power
50
Discretionary/Disposable Income
Income used for economic wants
51
Economic Needs
What is required to be able to participate in the economy (economic security safety net programs) as a worker and a consumer Normal consumption based on standard of living: 1. Food/Sustenance (medicines) -SNAP (food stamps), WIC, Medicaid (AHCCCS), Medicare, SCHIP 2. Shelter (housing + urban development dept) 3. Clothing 4. Transportation
52
Economic Wants
Everything else -> Quality of Life - Higher quality + quantity of "needs" - Art, jewelry, travel, entertainment - Investments + savings
53
Normal Consumption
Daily living expenses
54
Derived Consumption
Comes from a change in status - One time expense - New normal
55
Induced Consumption
Forced expenditure -> Immediate, no option (savings? Or loan/credit)
56
Conspicuous Consumption
Buy to be seen/showy
57
Investment
Invest for a return (gain) on the principle (amount invested) -Buy low, sell high = gain from profit -Dividends paid quarterly (share of profit) Risk of Loss ^ + Return ^
58
Uses of Income
Spend Now Save- Less risk, interest rate (return), fairly low, accessible Invest- Potential higher risk, return ^, long term (years)
59
Time-Value of Money
From compound interest (Earn interest on earned interest) | -Simple interest on principle only
60
Pretax Investments
1. Reduce taxable income (pay less income, tax now) - 401K- Private sector (often employer matches $) - 403B- Public sector (income limit of $150,000) - Health Savings Account (Income limit) - 459 Plans -> college savings (employer or financial institution) 2. Grow tax free, contribution limits ($15,000) per year 3. Can withdraw at 59 1/2 yrs old, MUST at 70 4. TAXED as normal income
61
Post Tax Investments | Dollars taxed as income
ROTH IRA (Individual Retirement Account) 1. Income limit ($150,000) unless employer pension/ret. plan + contribution limit 2. Grow tax free, no taxes at withdrawal 3. Can take at 59 1/2
62
Non retirement | Annuity
Risk v Insurance- (Share the risk w/others [expenses covered]) -Pay premium -> make a claim Bonds- Gov't or corporate -"loan" repaid at maturity with a guarantee return (unless bankrupt) Mutual Funds -Diversified investment into many stocks and/or bond funds

AP Government and Economics (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions