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30 Cards in this Set
- Front
- Back
What are the 3 types of Businesses?
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1)Sole Proprietorship (70%) 2)Partnership (10%) 3)Corporations (20%)
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What are the characteristics of a Sole Proprietorship?
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Owned by:one individual> recieves all profits and bears all losses. Benefits:easy to start/end, control over profits and operations, lower taxes. Costs:inlimited libility, hard to raise starting funds, responsible for all losses, limited managing knowledge.
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What are the characteristics of a Partnership?
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Ownened by:two or more individuals> recieve all profits and bear all losses. Benefits:easier to raise starting funds, combined managerial skills, lower taxes. Costs:unlimited liability, shared profits
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What are the characteristics of a Corporation?
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Owned by:stockholders> entilted legally to rights and responsibilites as if one person. Benefits: limited liability, greater financial capital, unlimited life, specialized management. Costs:increased taxes, difficult to start (state rules), more bureaucratic, increased government control.
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What is a stock?
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Publicly traded corporations are divided into many shares or stocks that can be bought and sold on various stock exchanges
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What is the DOW Jones Industrial Average?
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The weighted average of the 30 actively traded blue chip stocks, and measures the overall health of stock.
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What is a blue chip stock?
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Stock of a company with a solid earnings record and good reputation.
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What is market capitalization (market cap)?
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Estimates the cost of buyig an entire business in its current state, and measures a company's total value.
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How do you calculate the Market cap?
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Multiply the number of outstanding shares by the current market price of one share.
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What are the classes and ranges of the market caps?
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Mega cap: 200bil +
Big/Large: 10bil to 200bil Mid Cap: 2bil to 10bil Small Cap: 300mil to 2bil Micro Cap: 50mil to 300mil Nano cap: under 50mil |
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Why is competition good?
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Influences variety, lower prices, higher quality, innovation, growth, and efficiency
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What are the factors in competition?
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Price, Location, Quality, Experience, Selection, Brands, Popularity, Service, Endorsements, Convience, appeal, Size.
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What are the 4 competitive markets?
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1)Pure (perfect) Competition 2) Monopolistic Competition 3)Oligopoly 4)Monoply
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What are the characteristics of a Pure (perfect)Competiton?
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Firms:very many, Products:identical, Competition:only price, Entry:easy, No Barriers, "Diseconomy of Scale"
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What is Diseconomy of Scale mean?
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That the size of the firm does not matter.
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What are the characteristics of a Monopolistic Competition?
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Firms:several, Products:differential, Competition:some price, Few Barriers, "Diseconomy of Scale"
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What are the characteristics of a Oligoply?
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Firms:few dominating, Products:very similar, Competition: mostly non-price, Higher Barriers to entry, "Economy of Scale"
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What is Price Leadership?
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When a market learder sets prices.
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Define Price Wars.
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When firms slash prices to try to gain market share from their competitors.
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Cartel Theory & Collusion
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The oligopolists get together and act as if they were one monopolistic quantity to maximize profit.
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What is the Game theory?
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The technique that allows us to examine the strategies of Oligopolists and pick the best strategy.
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What are the characteristics of a Monopoly?
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Single seller, no close sunstitutes, "Price Makers", Blocked entry, Competition:advertising.
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What are the Barriers to Entry in a Monopoly?
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Economies of scale, legal barriers, ownership of essential resources. (they are rare)
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What is a Natural Monopoly case?
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When the average total cost declines over extended output in which case a monopoly would create the least amount of cost.
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What is a Graphic Monoploy?
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When a business is the only firm located within a large distance.
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What is a Technological Monopoly?
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When a company invents something and gets a patent, it will have a monopoly on that product until the patent expires.
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What is the definition of an externality?
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An economic side effect. Both positive and negitive externalities.
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Define a Market Failure.
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When the cost and benefits are not reflectd in the market prices paid by the buyers and sellers of the original product.
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What are some examples of Government Monopolies?
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Police, fire protection, highways, Army
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What is the Sherman Anti Trust Act?
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It made monopolies illegal. and Is enforced by the Federal Trade Commission(FTC).
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