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50 Cards in this Set
- Front
- Back
single proprietorship
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the easiest type of business to start and run; also the most common form of business
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rent
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payment for the use of resources that belong to someone else
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corporation
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the form of business organizaation that has limited liability, unlimeted life, and a greater ability to gather money
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fixed costs
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costs that stay the smae no matter how many products are made
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partnership
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the least common form of business organization, has two or more owners
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capital gain
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the result of selling an asset for more than it cost to buy
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variable cost
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costs that increase with the number of products produced
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interest
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payment for the use of money that belongs to someone else
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profit
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the result of selling a product for more than it cost ot make it
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dividend
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a share of profit paid to the owners of corporate stock
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Although single proprietorshops are the easiest form of business to start, they have unlimited liability and are limited to the financial resources of the individual owner.
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true
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partnerships are often formed by people who want to share the costs of expensive capital or services needed to run some types of businesses
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true
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Corporations are both the most common and most important form of business organization.
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false
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Fixed costs, which do not change as a firm makes more products, include rents, property taxes, and mortgage payments.
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true
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Raw materials are an example of varialbe costs, which do change as a firm produces more products
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true
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Most small firms find it easier than large firms to reduce the average fixed cost per item produced
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false
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If a firm sold 200 items last week and 400 this week, the fixed cost this week would be twice as large as it was last week
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false
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If a firm pays $500 a month to use a parking lot that belongs to another firm, it is paying rent.
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true
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Large, successful firms usually can expect to pay the same interest rate that is paid by ordinary consumers and businesses.
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false
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A corporate bond is a type of loan made to a corporation. Its interest must be paid regardless of whether the firm earns a profit
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false
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Corporations have all of the following advantages over other business forms except:
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lower tax rates
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In 1990, corporations accounted for about ____ of all sales in the United States.
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90%
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Fixed costs include each of the following except:
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electricity to run machines
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If I replace a worker with a rented machine, I am
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trading a variable cost for a fixed cost
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If a shoe store sells socks and wallets in addition to shoes, it is probably trying to
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reduce its average fixed costs
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A firm makes books and has a variable cost of $5.00 per book. It sells them for $8.00 each. The business has fixed costs of $400 a week. Last week it sold 300 books. The firm earned a total profit of ______ last week.
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$500
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If more people want to borrow money, while the number of people who are willing to lend money stays the same, we should expect interest rates to
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go up
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The two ways to earn money from owning stock are through
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dividends and capital gains
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Small corporations may have a hard time selling bonds because
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they are less well known
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The surest cause for an increase in the value of a corporation's stock is
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it earns a profit and pays a dividend
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The two types of business organizations that have unlimited liability for the owners are _____ and _____.
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proprietorship , partnership
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Legal control of a corporation is determined through a ____ of the voted stock
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majority
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Fixed costs ____ as the number of products made increases
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stay the same
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Variable costs _____ as the number of products increases.
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change
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Many people who are first starting businesses _____ their fixed costs and therefore charge too little for their product
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underestimate
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Firms often find that they can _____ their average fixed costs by selling more products or by staying open for longer hours
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reduce
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Borrowed money is really a borrowed clain on
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resources
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_____ is payment for the current use of someone else's money
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interest
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A _____ ia an IOU or an obligation to pay back a loan that a corporation sells.
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corporate bond
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A _____ is a unit of ownership in a corporation
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share of stock
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pure competition
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when there are many firms that make similar products that try to convice customers that their product is better than the rest
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pure monopoly
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a firm that is the only producer of a product that has no substitutes
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monopolistic competition
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when a firm has no control over the market price it can charge because many other firms sell the same product
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workable competition
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a reasonable balance between the benefits of monopolistic firms and competition
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diseconomies of scale
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anything that results in a large firm having a disadvantage compared to a small firm in the same market
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horizontal competition
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when firms that produce the same good or service join together
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vertical competition
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formed when firms that perform different steps in a process join together
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economies of scale
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anything that gives a large firm an advantage over a smaller firm in the same market
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natural monopoly
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a firm that has very high fixed costs and would be inefficient operating under competition
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oligopoly
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when there are so few producers of similar products that they may affect prices
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