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Questions and Answers
What is a benefit of sole proprietorships that corporations and partnerships do not have?
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:
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:
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?
Which product would have a low level of elasticity?
What example best describes the market structure of monopolistic competition?
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?
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?
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?
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:
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 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
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?
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 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:
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:
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:
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?
What type of business organization offers many benefits and is specific to the United States?
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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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