Podcast
Questions and Answers
What could shirking be described as?
What could shirking be described as?
Doing less than an equal share of tasks
What are the advantages of a sole proprietorship?
What are the advantages of a sole proprietorship?
- Limited liability
- Full control by the owner
- Tax benefits
- All of the above (correct)
A business that is legally distinct from its owners and considered an entity in its own right is a?
A business that is legally distinct from its owners and considered an entity in its own right is a?
Corporation
What is a business organization that can conduct business in its own name and can own property as if it were an individual?
What is a business organization that can conduct business in its own name and can own property as if it were an individual?
Who are the owners of a corporation?
Who are the owners of a corporation?
What is a person or group that buys a franchise called?
What is a person or group that buys a franchise called?
When deciding whether or not to increase production, what should a business owner carefully consider?
When deciding whether or not to increase production, what should a business owner carefully consider?
What do economists believe is the major goal of each firm?
What do economists believe is the major goal of each firm?
Which of the following is a fixed cost?
Which of the following is a fixed cost?
Which of the following is a variable cost?
Which of the following is a variable cost?
Why does shirking occur?
Why does shirking occur?
What disadvantages do proprietorships include?
What disadvantages do proprietorships include?
What is the disadvantage of a proprietorship that could directly affect the owner's personal assets?
What is the disadvantage of a proprietorship that could directly affect the owner's personal assets?
Which business organization combines two or more people's specializations with equal decision-making authority?
Which business organization combines two or more people's specializations with equal decision-making authority?
What are the disadvantages of partnerships?
What are the disadvantages of partnerships?
How are corporations able to borrow large sums of money?
How are corporations able to borrow large sums of money?
How do bondholders differ from stockholders?
How do bondholders differ from stockholders?
What must a person or group do to purchase a franchise?
What must a person or group do to purchase a franchise?
What law is a strawberry farmer experiencing when using more nutrients on a fixed plot of land without increased crop yield?
What law is a strawberry farmer experiencing when using more nutrients on a fixed plot of land without increased crop yield?
Marginal revenue equals?
Marginal revenue equals?
What are marginal decisions?
What are marginal decisions?
What is the cost to a firm that changes according to the number of units produced?
What is the cost to a firm that changes according to the number of units produced?
How is profit or loss computed?
How is profit or loss computed?
Why might we observe the law of diminishing marginal returns at a fast-food restaurant?
Why might we observe the law of diminishing marginal returns at a fast-food restaurant?
What is the cost to produce one additional unit called?
What is the cost to produce one additional unit called?
What do you get when you divide total cost by quantity produced?
What do you get when you divide total cost by quantity produced?
What happens to average total cost as a firm increases the quantity produced?
What happens to average total cost as a firm increases the quantity produced?
What is marginal cost equal to?
What is marginal cost equal to?
Study Notes
Shirking and Its Implications
- Shirking refers to doing less than an equal share of tasks, often linked to the value individuals place on leisure.
Business Structure and Ownership
- Sole proprietorships have several advantages, including full control by the owner.
- Corporations are distinct legal entities separate from their owners, known as stockholders.
- Partnerships involve multiple individuals sharing decision-making authority and specialization.
Costs in Business
- Fixed costs are expenses that do not change with the level of output, such as rent.
- Variable costs fluctuate based on production, including raw materials and labor.
- Marginal cost represents the expense incurred from producing one additional unit.
Profit Maximization
- The primary goal for firms is to maximize profit by carefully considering marginal costs and revenues.
- Profit or loss is derived from subtracting total cost from total revenue.
Franchise and Business Growth
- A franchisee is an individual or group that purchases the rights to operate a franchise, and they must adhere to various obligations.
- Corporations can raise substantial capital through the issuance of bonds, which provide bondholders with fixed interest payments.
Production Dynamics
- The law of diminishing marginal returns occurs when adding more resources results in lesser increases in output, as seen in scenarios like farming.
- Average total cost is calculated by dividing total cost by the quantity produced, which tends to decrease when production increases.
Decision-Making in Business
- Marginal decisions are incremental choices made in response to changes in costs and revenues, essential for effective management.
- Owners should carefully evaluate marginal costs when contemplating production increases, as these directly impact profitability.
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Description
Test your understanding of key concepts from Economics Chapter 7 with these flashcards. Each card contains a term and its definition, helping you reinforce your knowledge of business organization structures and concepts. Perfect for studying and review before exams.
