Business Concepts Unit 2

Questions and Answers

What is a benefit of sole proprietorships that corporations and partnerships do not have?

An unlimited life span

A single owner with full control (correct)

Fewer rules and regulations

The ability to sell stocks

Businesses play a role in the circular flow of goods by:

Directly selling products to consumers

Providing labor to resource markets

Offering natural resources to manufacturing firms

Creating goods that households want to buy (correct)

Government most often regulates essential services like water treatment by:

Taking control over private corporations

Creating barriers to entry in monopolistic competition

Setting up natural monopolies (correct)

Eliminating pure competition markets

Which product would have a low level of elasticity?

A product that has steady demand, even as prices change Signup and view all the answers

What example best describes the market structure of monopolistic competition?

Several different restaurants compete for customers in a city neighborhood Signup and view all the answers

In the circular flow model, which part of the economy would provide materials to businesses?

Resource markets Signup and view all the answers

What type of business organization offers many benefits and is specific to the United States?

Limited liability companies Signup and view all the answers

If the demand for a good rises sharply, what is likely to occur with the demand for a complementary good?

The demand for the complementary good will also rise Signup and view all the answers

Demand for a product is most likely to decrease because:

The total number of consumers in a market declines Signup and view all the answers

Which pair of phrases best completes the diagram? 'Corporation' - Advantages: unlimited life span, _ - Disadvantages: limited power for owners,

Funds raised by selling stock; complex regulations Signup and view all the answers

Which word and phrase best completes the diagram? Feature of ________________ - Low barriers to entry - Many competing firms - Businesses selling the same product

Pure Competition Signup and view all the answers

How is the equilibrium price found using a supply and demand graph?

It is found where the supply curve meets the demand curve Signup and view all the answers

The law of supply claims that sellers will increase their supply of a good if:

The price of the good goes up Signup and view all the answers

The supply of a good available in a market is likely to decrease when:

Few workers have the skills needed to create the product Signup and view all the answers

Households play a role in the circular flow of goods by:

Purchasing goods at product markets Signup and view all the answers

According to the law of demand, consumer demand for a product will decrease if:

The product's price increases Signup and view all the answers

What type of business organization offers many benefits and is specific to the United States?

Limited liability companies Signup and view all the answers

Study Notes

Business Structures

Sole proprietorships provide full control to a single owner, unlike corporations and partnerships.
Limited liability companies (LLCs) offer specific benefits unique to the United States.

Role of Businesses in the Economy

Businesses create goods that households desire, playing a critical role in the circular flow of goods.
In the circular flow model, resource markets provide materials to businesses to produce goods.

Market Structures

Monopolistic competition is exemplified by several different restaurants competing in a city neighborhood.
Pure competition features low barriers to entry, many competing firms, and businesses selling the same product.

Demand and Supply Dynamics

A sharp rise in demand for a good typically increases the demand for its complementary goods.
Demand is likely to decrease when the total number of consumers in a market declines or when the price of a product increases.
The law of supply indicates that sellers will increase supply when the price of a good rises.

Price Equilibrium

The equilibrium price is determined at the intersection of the supply and demand curves on a graph.

Elasticity of Demand

Products with steady demand, regardless of price changes, exhibit low elasticity.

Government Regulation

Governments often regulate essential services, like water treatment, by establishing natural monopolies to ensure availability and fairness.

Factors Affecting Supply

The supply of a good may decrease if there are few skilled workers available to produce it, while abundant technology typically increases supply.

Consumer Behavior

According to the law of demand, as prices increase, consumer demand for a product tends to decrease.

Important Characteristics of Corporations

Corporations benefit from an unlimited lifespan and can raise funds by selling stock, but owners face limited power and complex regulations.

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Description

Test your understanding of key business concepts in Unit 2. This quiz covers topics such as sole proprietorships, the circular flow of goods, and the unique advantages of different business structures. Challenge yourself and enhance your knowledge today!

Business Concepts Unit 2

Questions and Answers

What is a benefit of sole proprietorships that corporations and partnerships do not have?

Businesses play a role in the circular flow of goods by:

Government most often regulates essential services like water treatment by:

Which product would have a low level of elasticity?

What example best describes the market structure of monopolistic competition?

In the circular flow model, which part of the economy would provide materials to businesses?

What type of business organization offers many benefits and is specific to the United States?

If the demand for a good rises sharply, what is likely to occur with the demand for a complementary good?

Demand for a product is most likely to decrease because:

Which pair of phrases best completes the diagram? 'Corporation' - Advantages: unlimited life span, _ - Disadvantages: limited power for owners,

Which word and phrase best completes the diagram? Feature of ________________ - Low barriers to entry - Many competing firms - Businesses selling the same product

How is the equilibrium price found using a supply and demand graph?

The law of supply claims that sellers will increase their supply of a good if:

The supply of a good available in a market is likely to decrease when:

Households play a role in the circular flow of goods by:

According to the law of demand, consumer demand for a product will decrease if:

What type of business organization offers many benefits and is specific to the United States?