Economics Unit 1 2
Terms
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- What does the demand line represent?
- the amount of consumers that desire a product
- What does the supply line represent?
- the amount of product the producers are willing to sell
- What is the market value?
- the price most people are willing to pay for an item
- How do you find the market value?
- the intersection of the supply and demand lines
- What is a household?
- anyone who has land, labor, capital, or entrepreneurship to sell in resource markets
- What is a product market?
- a market where finished goods and services are bought or sold
- What is a resource market?
- a market where the factors of production or economic resources are bought and sold
- What is capital?
- money
- What are public goods and services?
- goods and services provided by the government because individuals could not supply them efficiently
- What are some examples of public goods and services?
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public park
library
post office
jail
interstate
police department - How does the government pay for public goods and services?
- taxes and borrowed funds
- What is the role of financial institutions in public goods and services?
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receive deposits
encourage saving and investment by interest
make loans - What is a proprietorship?
- A type of business that is owned and managed by one individual who receives all profits and bares all losses
- What is a partnership?
- A type of business owned and managed by two or more individuals who share all profits and losses
- What is a corporation?
- A type of business that is owned by stockholders and has rights and responsibilities as if it were a person
- What are the advantages of a proprietorship?
- easy to start aand go out of business
- What are the benefits of a proprietorship?
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-easy to start and go out of business
-control over profits and business operations
-pride of ownership
-lower taxes - What are the disadvantages of a proprietorship?
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-unlimited liability
-difficult to raise capital
-responsible for all losses
-management knowledge limited - What are the benefits of a partnership?
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-easier to raise capital
-can combine management skills
-pride of ownership
-lower taxes - What are the disadvantages of a partnership?
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-unlimited liability
-shared profit
-possible conflict of partners
-possibility of instability after death of a partner - What are the benefits of a corporation?
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-limited liability
-greater financial capital
-unlimited life
-specialized management - What are the disadvantages of a corporation
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-increased taxation
-difficult to start a corporation because of different state laws
-may be larger of bureaucratic than other businesses
-increased government control