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50 Cards in this Set

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