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sole proprietorship
answer
a business owned and managed by a single individual
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advantages of sole proprietorship
answer
owner gets all profit, easy start up, full control
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disadvantages of sole proprietorship
answer
owner is responsible for all debt, limited access to resources, easily shut down
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product market
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the market in which households purchase the goods and services that firms produce
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factor market
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a market where firms purchase productive resources from households
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corporation
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company recognized as a legal unit that has rights and liabilities separate from each of its members
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advantages of corporations
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limited risks, owners cant be sued, ownership changes easily, potential for long life, access to more resources
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disadvantages of corporations
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more regulations to follow, harder to start, double taxation, owners have little control
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monopoly
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an industry controlled by one company
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characteristics of a monopoly
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high barriers to entry, no substitutes
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problems of monopolies
answer
business has total control over price, low quality, poor customer service
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examples of monopolies
answer
Standard Oil, Carnegie Steel, Microsoft
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oligopoly
answer
a market structure in which only a few sellers offer similar or identical products
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characteristics of oligopolies
answer
high barriers to entry, products are different or similiar
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examples of oligopoly
answer
cereal, cell phone, film industries
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pure/perfect competition
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an industry with many businesses selling the same product
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characteristics of pure competion
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no barriers to entry, products are identical, low prices
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benefits of pure competition
answer
prices are low for consumers
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demand
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the quantity of a good or service that consumers are willing and able to buy at a certain price
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supply
answer
How much of a good or service a producer is willing and able to produce at different prices.
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law of demand
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as price goes up, quantity demanded goes down; as price goes down, quantity demanded goes up.
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law of supply
answer
as prices go up, quantity supplied goes up; as price goes down, quantity supplied goes down
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price floor
answer
lowest legal price that can be paid for a good or service
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price ceiling
answer
a legal maximum on the price at which a good can be sold
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