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Market structure
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How markets work based on competition
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Non-profit
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Functions like a business but it not for profit (Red Cross)
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Limited partnership
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One or more of the partners contributes capital and shares in the profits, but does not share in the responsibility of day-to-day operations
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Monopoly
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A market where there is only one producer of a good or service
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Store of value
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A characteristic of money that allows it to be saved for use later
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Velocity of money
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The rate at which money is exchanged in the circular flow; how frequently it changes hands in a period of time
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Dividends
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Payments made to shareholders or bond owners from the profits of a company
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S corporation
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Special structure; owners are taxed like sole proprietors or partners, but have liability like a corporation
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Fractional reserve
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The percentage of deposits banks have to keep on hand; they lend out the rest
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Oligopoly
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A few very large companies dominate the market making similar but not identical products
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Medium of exchange
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Anything that is accepted and recognized as money
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Goods and services
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Produced for sale in the product market
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Partnership
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Business owned and managed by two or more individuals who share profits and responsibility for the business
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M1
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Money in circulation that is liquid, easily accessed and used (cash, checking, travelers checks)
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Monopolistic competition
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Many producers make similar but not identical profits
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Profit
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Money a business has left over after paying all of its expenses
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M2
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M1 plus saving accounts, money market funds, and timed deposits
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Cartel
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A producer that establishes prices and sets production levels for its industry. OPEC is an example. They are illegal in the US.
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Sole proprietorship
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Business owned and managed by one individual
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Business
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A person or group that produces goods and/ or services
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Circular flow
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A model that shows the movement of money, factors of production, and products among households and businesses throughout the economy. Government may also appear on the model
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Bond
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A loan to a company or government entity
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Factor market
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Households provide land, labor, and capital to producers for a return on their labor or investment
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Commodity money
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Items used as a medium of exchange (fur, tea, tobacco, wampum, salt, gold, silver)
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Labor unions
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Organizations of workers that bargain with employers for higher wages, benefits, and better working conditions
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Voluntary exchange
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Willingly trading goods and services for money or other items
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Fiat money
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Currency that is not backed by specie (gold or silver) and is recognized because of faith in the government that creates it
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Stock
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Part ownership in a company (shares)
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Professional associations
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Represent people who work in a particular field (ex. American Medical Association, National Education Association)
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Profit motive
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Incentive to make a profit, the reason to start business
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Money
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A medium of exchange used to buy goods and services
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Business forms
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The way firms are organized (ex. sole proprietorship)
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Cooperative
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Consumer or producer businesses jointly owned by their members for the benefit of their members (ex. Credit Union)
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Product market
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Producers sell and consumers buy goods and services
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Perfect competition
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A market that has many producers of identical products; prices are set by supply and demand
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Barter
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Exchange of goods and services without using money. People trade goods and services they have for those they want
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Household
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A person or group of individuals that occupy a housing unit like an apartment, condominium, or single-family house
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Corporation
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Legal entity for doing business owned by shareholders and governed by a board of directors
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Market
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Any situation that brings producers (sellers) and consumers (buyers) together for voluntary exchange
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