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Bruce Market Structures
Terms in this set (23)
What are the Three Types of Businesses?
Sole proprietorship, Corporation, Partnership
What percent of business are owned by Sole proprietorships?
What are three advantages of Sole proprietorships?
"• Easy to start and go out of business, Sole proprietors make all decisions, Owner keeps all profits, No taxes, Pride of ownership
What are three disadvantages of Sole proprietorships?
"• Unlimited liability - owner is fully responsible for all losses and debts. • Difficult to raise financial capital (money), Size & efficiency - may be too small to afford the appropriate # of workers and inventory, Limited managerial experience, Difficult to attract qualified employees, Limited life - owner quits or dies, business dies
What percent of business are owned by Partnerships?
What are the two types of Partnerships?
General and Limited Libaility
What are three advantages to partnerships
"• Easy to start. • Partners make all decisions & combined managerial skills. • Owners keep all profits• No taxes• Easier to raise financial capital• More efficient; easier to attract more qualified workers, Pride of ownership
What are three disadvantages to partnerships?
"• Partners have unlimited liability• Limited life• Potential conflict between partners• Business must be dissolved if one partner dies or leaves
What percent of business are corporations?
What are three advantages to Corporations?
"• Easy to raise financial capital (comes from sales of stock)• limited liability - owners (stockholders) are NOT responsible for losses and debts• specialized management - each department (i.e., Accounting, Human Resources, etc.) is managed by someone who specializes in that field• unlimited life-business lives on if owner dies• Ease of transferring ownership (if a stockholder sells their stock, they are no longer an owner)
What are three disadvantages to Corporations?
"• Must pay corporate income taxes• Difficult to start• Owners (stockholders) have little say in how the business is run• Government regulation• Double taxation—company pays taxes, AND stockholders pay taxes on dividends or gains from sale of stock
What are the FOUR TYPES OF MARKET STRUCTURES?
"1) Perfect Competition 2) Monopolistic Competition 3) Oligopoly 4) Monopoly
Define Perfect Competition
market situation in which there are numerous buyers and sellers, and no one buyer / seller can affect price
What are three conditions for perfect competition
"• Many buyers & sellers• Similar product• No control over price• Easy entry & exit• Easy access to price information
What are some examples of imperfect competition?
Rarely see examples of perfect competition—"Crude Market in Oil" activity and sometimes in agriculture
What are the conditions of monopolistic competition?
"• Many buyers & sellers• Slightly different products (i.e., "differentiated products" or "product differentiation")• Some control over price (because of product differentiation)• Relatively easy entry & exit• Nonprice competition (compete based on things other than price, like quality or characteristics of product)
Example of Monopolistic
Nail shops, beauty salons
"industry in which a few sellers dominate and exercise some control over price
What are four conditions of Oligopoly
"• Few buyers & sellers• Slightly different products (i.e., "differentiated products" or "product differentiation")• Some control over price (because of product differentiation)• Difficult to enter market • Nonprice competition (compete based on things other than price, like quality or characteristics of product)
What are two examples of Oligopoly
Cereal industry, airline industry
"single seller controls the supply of a good or service and determines the price (one product & nearly impossible to enter)
What are the four types of Monopolies
Natural, Geographic, Technical, Government
What are the five causes of Market Failures?
"(1) Inadequate competition -- not enough or too many buyers / sellers(2) Inadequate information - not enough info about what is happening in the marketplace(3) Resource immobility - inability to move resources (natural res., human res., capital goods, entrepreneurship)(4) Lack of public goods & services. Definition: products consumed by everyone (highways, parks, etc.)(5) Externalities
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