Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
14 Cards in this Set
- Front
- Back
|
How do households dispose of income?
|
Taxes
Personal Savings Personal Consumption |
|
|
Durable goods?
|
Products with lives of 3 yrs or more (cars, electronic equipment)
|
|
|
Nondurable goods?
|
Products with lives of less tahn 3 yrs (food and clothing)
|
|
|
How much consumer spending goes to services?
|
nearly 60%
|
|
|
What are the 3 legal forms of businesses?
|
Sole Proprietorship
Partnership Corporation |
|
|
5 Characteristics of Sole Proprietorship:
|
1) Owned and Operated by One Person
2) Easy To Set Up 3) Often Fail Financially and are limited in Borrowing Options with only 1 person 4) Solo Entrepreneurship 5) Unlimited Liability |
|
|
4 Characteristics of Partnership:
|
1) East to Set Up and Easier to Manage Everything
2) More Financial Options but Still Fairly Limited 3) Divided Authority May Lead to Inaction and Disagreement 4) Even Worse Liability b/c responsible for partner(s)' actions as well |
|
|
Characteristics of Corporation:
|
1) Finance Through Stocks, Bonds, and Securities as well as other Easily Obtainable Options
2) Limited Liability = Owners only responsible for selves 3) Legal Entity and has "separate life" from owners and officers; IMMORTAL 4) Double Taxation (Dividends taxed twice; once as stock and again as profits) |
|
|
Principal-Agent Problem (Who is in both parties, and what is problem?)
|
Principals - Stockholders who "own corporation"
Agents - Executives who work corporation Problem - Disagreement |
|
|
Spillover Occurs When?
|
Costs or Benefits of Good "spill over" to third party (not immediate buyer or seller)
|
|
|
Exmaple of Spillover Cost
|
Pollution: Chemical Manufacturer dumps wastes into lake, fish suffer spillover costs
|
|
|
Solutions for Spillover Costs
|
1) Legislation (Prohibition of stuff)
2) Specific taxes |
|
|
Exmaple of Spillover Benefits
|
Education: Better-educated people generally achieve higher income than low-educated people. Also, those schools receive more awards from stellar alumni
|
|
|
Corrections for Spillover Benefits
|
1) Subsidize consumers
2) Subsidize suppliers 3) Provide goods via government |
