History Final
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Created by:
ezekielfreak on December 12, 2009
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101 terms
Terms | Definitions |
|---|---|
 Three types of economies? | Command, Traditional, and Market |
| Traditional Economy (advan/Disadvan) | Economic activity stems from ritual, habit, or custom (advantages): Everyone knows which role to play (disadvantages): discourages new ideas and new ways of doing things |
| Command Economy (Advan/Disadvan) | Central authority makes most of the decisions (advantages): it can change direction drastically in a relatively short time. (disadvantages): not designed to meet the wants of consumers |
| Market Economy (Advan/Disadvan) | People and firms act in their own best interests to answer the what how and for whom questions. (advantages): Over time, it can adjust to change also there is individual freedom (disadvantages): It does not provide for the basic needs of everyone in the society |
| Inflation | A rise in the general level of prices |
| Capitalism | private citizens, many of whom are entrepreneurs, own the factors of production |
| Consumer Sovereignty | This describes teh role of the consumer as sovereign, or ruler, of the market "customer is always right" |
| mixed economy | people carry on their economic affairs freely, but are subject to some government intervention and regulation |
| What are three forms of business organizations? | Sole Proprietorship, Partnerships, and Corporations |
| Sole proprietorship (advan/Disadvan) | A business owned and run by one person (advantages): The ease of starting up, and the ease of management (disadvantages): Unlimited liability; this means that the owner is personally responsible for everythign |
| Partnerships (advan/disadvan) | A business jointly owned by two or more persons. (advantages): Ease of establishment, lack of special taxes (disadvantages): Each partner is responsible for acts of all other partners |
| Corporations (advan/disadvan) | A form of business organization recognized by law as a separate legal entity having all the rights of an individual (needs a charter) (advantages): Ease of raising financial capital (disadvantage): The difficulty and expense of getting a chargetr |
| Horizontal Merger | Two or more firms that produce the same kind of product join forces |
| Vertical Merger | An automaker merging with a tire maker GET IT?!?!??! |
| Conglomerate | A firm that has at least four businesses, each making unrelated products, none of which is responsible for a majority of its sales |
| Multinational | A corporation that has manufacturing or service operations in a number of different countries |
| Non profit orgs | they make no money but donate services to the community |
| Cooperatives (consumer, service, producer) | a cooperative is a voluntary association of people formed to carry on some kind of economic activity that will benefit its members |
| Consumer cooperatives | a voluntary association that buys bulk amounts of goods such as food and clothing on behalf of its members. |
| Service Cooperatives | Provides ervices such as insurance, credit and baby sitting to its members (credit union): financial org that accepts deposits from and makes loans to employees |
| Producer Cooperatives | helps members promote or sell their products |
| Labor Unions | an organization of workers formed to rep its members interests |
| professional associations | a group of people in a specialized occupation that works to improve the working conditions, skill levels, and public perceptions of the proffession |
| Chamber of commerce | this promotes the welfare of its members and of the community |
| Better Business Bureau | A non profit org sponsored by local businesses to provide general information on companies |
| Public Utilities | investor or municipal owned companies that offer important products to the public, such as water or electric services |
| Demand | the desire, ability, and willingness to buy a product |
| Microeconomics | the area of economics that deals with behavior and decision making by small units |
| Law of Demand | the quantity demanded of a good or service caries inversely with its price. Prices goes up, quantity demanded goes down. |
| Income effect | the change in quantity demanded because of a change in price that alter consumers real income |
| Substitution effect | the change in quantity demanded because of the change in the relative price of the product |
| Consumer income | change in income causes change in demand |
| Consumer tastes | Change in tastes change demand |
| Substitutes | products that can be use in place of other products |
| Complements | some goods are known as this because of the use of one increases the use of the other |
| Change in expectations | stop buying something because you waiting for the new better product |
| Number of consumers | A change in income, tastes and prices of related products affects the individual demand schedules and curves |
| Elasticity (examples) | a change in prices causes a change in quantity demanded corn, vegetables ect |
| inelasticity | a change in prices causes a relatively smaller change in the quantity demanded. ex: table salt |
| supply | the amount of a product that would be offered for sale at all possible prices that could prevail in the market |
| Law of supply | the principle that suppliers will normally offer more for sale at high prices and less at lower prices |
| What causes a change in supply? | Cost of inputs, productivity, technology, taxes and subsidies, expectations, government regulations, number of sellers |
| Cost of imputs | imputs such as labor, if the cost of labor rises producers make less, and vise versa |
| Productivity | when management motivates its workers, ect, productivity increases, which results in more things produced |
| Subsidy | A government payment to an individual, business, or other group to encourage or protect a certain type of economic activity |
| fixed cost | the cost that a business incurs even if the plant is idle and output is zero. (overhead) |
| variable cost | A cost that changes when the business rate of operation or output changes. Costs for things such as labor and raw materials |
| total cost | the sum of fixed and variable costs |
| marginal costs | the extra cost incurred when a business produces on additional unit of a product. |
| Price | the monetary value of a product as established b supply and demand |
| what are the advantages of prices | They help decide the three basic WHAT HOW AND FOR WHOME questions all societies face. |
| Rationing | a system under which an agency such as government decides everyones "fair" share. |
| Rebates | a partial refund of the original price of the product. |
| Market equilibrium | A situation in which prices are relatively stable, and the quantity of goods or services supplied is equal to the quantity demanded. |
| Equilibrium price | this is the price that clears the market by leaving neither a surplus nor a shortage at the end of the trading period. |
| Price Ceiling | A maximum legal price that can be charged for a product ex: rent control and gas station rationing |
| Price Floor | lowest legal price that can be payed for a good or service ex: minimum wage and farm prices |
| Target price | a price floor for farm products |
| Nonrecourse loan | a loan that carries neither a penalty nor further obligation to repay if not paid back |
| deficiency payments | check sent to producers that makes up the difference between the actual market price and the target price |
| Laissez-faire (Adam Smith) | the philosophy that government should not interfere with commerce or trade |
| 4 Market structures | Perfect competition: identical products (cant exist), monopolistic competition (product differentiation), oligopoly( a few large groups), monopoly (Natural geographical technological government) |
| Perfect competition examples | electric companies? |
| Monopolistic competition examples | different types of shoe makers |
| oligopoly eamples | few large sellers dominate the industry: auto industry or steel industry |
| Monopoly examples | natural: costs of production are minimized by having a single firm product the product Geographic: based on the absence of other sellers in a certain area (gas station) Technological: ownership or control of a manufacturing method, process, or other scientific advance. Government: owned and operated by the government |
| Collusion | a formal agreement to set prices or to otherwise behave in a cooperative manner. |
| Price-fixing | agreeing to charge the same or similar prices for a product. |
| Externalities | unintended side effect that either benefits or harms a third party not involved in the activity |
| Public goods | collectively consumed products |
| Trusts | Legally formed combinations of corporations or companies. |
| price discrimination | the practice of charging customers different prices for the same product |
| cease and desist order | An FTC ruling requiring a company to stop an unfair business practice. |
| Public disclosure | the requirement that businesses reveal information to the public |
| FDA (Food and drug administration) | enforces las to ensure purity, effectiveness, and truthful labeling of food, drugs, and cosmetics |
| FTC (Federal Trade Commision) | Administers antitrust laws forbidding unfair competition |
| FCC (Federal Communications Commission) | Regulates radio and television |
| SEC (Securities and exchange commission) | Regulates and supervises the sale of listed and unlisted securities and the brokers, dealers, and bankers who sell them |
| FAA (Federal Aviation Administration) | Oversees the airline industry |
| EEOC (Equal employment opportunity commission) | Investigates and rules on charges of discrimination by employers and labor unions |
| OSHA (Occupational Safety and Health Administration) | Investigates accidents at the workplaces (protects employees) |
| CPSC (Consumer product safety commission) | Develops standards of safety for consumer goods |
| Sherman Anti-trust (1890) | Outlawed all contracts to halt the growth of trusts and monopolies |
| Clayton Anti-Trust (1914) | Strengthened the Sherman Act by outlawing price discrimination |
| Federal Trade Commission Act (1914) | Established the FTC to regulate unfair method of competition in interstate commerce |
| Robinson Patman Act (1936) | Forbade rebates and discounts on the sale of goods to large buyers unless the rebate and discount were available to all |
| Macroeconomics | The branch of economics that deals with the economy as a whole. |
| 2 types of unions | Craft/trade union: perform same kind of work Industrial: Same industry of work |
| 4 types of union arrangements | Closed shop(illegal), Union shops, modified union shops, agency shops |
| Closed Shops (illegal) | where the employers agrees to hire only union members |
| Union Shops | workers do not have to belong to the union to be hired, but must join soon after and remain a member for as long as they keep their jobs |
| Modified Union Shops | workers do not have to belong to a union to be hired and cannot be made to join one to keep their jobs. |
| Agency Shops | does not require a workers to join a union as a condition to get or keep a job, but does require the worker to pay union dues to help pay collective bargaining costs. |
| Collective bargaining | reps from both sides meet, from union and management; they negotiate |
| Ways to resolve problems | Mediation, Arbitration, Fact-finding, injunction and seizure, presidential intervention |
| Mediation | using a neutral third person to settle the dispute |
| Arbitration | Third party member makes final decision |
| Fact-Finding | neutral third party collect facts about a dispute and present non-binding recommendations |
| Injunction and Seizure | Injunction- court order not to act Seizure-temporary take over of company to resolve problems |
| Presidential intervention | president helps make decision |
| 4 catagories of labor | Unskilled Labor (digging ditches, picking fruit...) Semiskilled Labor (dishwashers and operating lawnmowers...) Skilled Labor (Typists, computer techs...) Professional Labor (Layers, and scientists...) |
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