Podcast
Questions and Answers
Which of the following is NOT considered an economic agent?
Which of the following is NOT considered an economic agent?
- Firms
- Stock Markets (correct)
- Government
- Households
Households supply labor, capital, land, and entrepreneurial ability to product markets.
Households supply labor, capital, land, and entrepreneurial ability to product markets.
False (B)
What type of business structure involves multiple owners sharing profits and bearing unlimited liability for debts?
What type of business structure involves multiple owners sharing profits and bearing unlimited liability for debts?
- Corporation
- Sole Proprietorship
- Franchise
- Partnership (correct)
What is the primary goal of households according to economic theory?
What is the primary goal of households according to economic theory?
In a corporation, the liability of owners is limited to the value of their stock.
In a corporation, the liability of owners is limited to the value of their stock.
A _____ is a firm with a single owner who bears unlimited liability for the firm's debts.
A _____ is a firm with a single owner who bears unlimited liability for the firm's debts.
Match the economic agent to its role:
Match the economic agent to its role:
What is one factor that affects a firm's decision to produce a good or service?
What is one factor that affects a firm's decision to produce a good or service?
A __________ is a good that is available for everyone to consume, regardless of who pays.
A __________ is a good that is available for everyone to consume, regardless of who pays.
Which factor does NOT significantly affect household consumer decisions?
Which factor does NOT significantly affect household consumer decisions?
Match the economic factors with their descriptions:
Match the economic factors with their descriptions:
Firms are primarily motivated by profit.
Firms are primarily motivated by profit.
Which of the following is a factor that governments influence in an economy?
Which of the following is a factor that governments influence in an economy?
Name one advantage of organizing work in factories.
Name one advantage of organizing work in factories.
Households maximize profits in a market economy.
Households maximize profits in a market economy.
Expectations and personal choices can affect consumer _____ decisions.
Expectations and personal choices can affect consumer _____ decisions.
What type of industry existed in Britain prior to the 18th century?
What type of industry existed in Britain prior to the 18th century?
What principle describes the market operating on voluntary agreements?
What principle describes the market operating on voluntary agreements?
Externality refers to the cost or benefit that falls on __________ parties involved in a market transaction.
Externality refers to the cost or benefit that falls on __________ parties involved in a market transaction.
Which of these is not a goal of government in the economic context?
Which of these is not a goal of government in the economic context?
Flashcards
Partnership
Partnership
A business with multiple owners who share profits and have unlimited liability for debts.
Corporation
Corporation
A business owned by stockholders; their liability is limited to their investment.
Production Cost
Production Cost
The expenses involved in creating a product or service.
Profit Margin
Profit Margin
The difference between revenue and expenses expressed as a percentage.
Signup and view all the flashcards
Government's role in Business
Government's role in Business
Establishing rules, promoting competition, regulating monopolies, and providing public goods; affecting income distribution, full employment and economic growth
Signup and view all the flashcards
Public Good
Public Good
A good available to everyone regardless of payment (e.g., national defense).
Signup and view all the flashcards
Externality
Externality
A cost or benefit that affects a third party not involved in a transaction.
Signup and view all the flashcards
Factors affecting firms
Factors affecting firms
Production costs, resources, profit margin, industrial relations, changes in demand, and resource availability.
Signup and view all the flashcards
Government Goals
Government Goals
Maximizing societal well-being, including full employment, price stability, and economic growth.
Signup and view all the flashcards
Voluntary Exchange
Voluntary Exchange
Agreements between individuals or organizations without coercion.
Signup and view all the flashcards
Economic Agents
Economic Agents
The key players in an economy: households, firms, and governments.
Signup and view all the flashcards
Households (consumers)
Households (consumers)
Individuals or groups of people living together who consume goods and services and provide labor to firms.
Signup and view all the flashcards
Firms/Producers
Firms/Producers
Organizations that produce goods and services for sale, seeking profit.
Signup and view all the flashcards
Utility Maximization
Utility Maximization
The principle that households and individuals attempt to maximize their satisfaction or happiness from consumption.
Signup and view all the flashcards
Product Markets
Product Markets
The marketplace where goods and services are bought and sold.
Signup and view all the flashcards
Resource Markets
Resource Markets
The marketplace where factors of production (land, labor, capital) are bought and sold.
Signup and view all the flashcards
Sole Proprietorship
Sole Proprietorship
A business owned and run by one person, who is responsible for all debts.
Signup and view all the flashcards
Factors affecting consumer decisions
Factors affecting consumer decisions
Elements that influence consumer choices, like price, income, personal preferences etc.
Signup and view all the flashcards
Division of labor
Division of labor
Breaking down a job into smaller tasks, making tasks more efficient or easier.
Signup and view all the flashcards
Profit-seeking
Profit-seeking
The main goal of businesses is to make money.
Signup and view all the flashcardsStudy Notes
Economic Agents
- Goods and services fulfill needs and wants within the economy; three main agents: households, firms, and government
- Households: individuals living under one roof; act as consumers (demanding goods/services) and suppliers of resources (labor, capital, land, entrepreneurial ability)
- Households aim to maximize utility (personal benefit)
- Households decisions influenced by price of goods, income, personal preferences, expectations, and other factors (e.g., bandwagon, interest rates, education level)
- Firms/Producers: profit-seeking entities that produce goods/services to sell
- Firms decisions are affected by production costs, resource availability, profit margins, demand levels, etc.
- Firms can exist as sole proprietorships, partnerships, or corporations
- Government: plays a role in establishing rules, promoting competition, regulating monopolies, and providing public goods that benefit the economy. Factors that affect government include:
- Laws and regulations, Taxation, and various economic issues (like income inequality)
Types of Firms
- Sole Proprietorships: single owner, responsible for all debt (e.g., plumber, doctor)
- Partnerships: multiple owners, shared profits and liabilities (e.g., law, accounting, medical)
- Corporations: legal entities owned by stockholders; limited liability (stockholders' risks are tied to the value of their shares)
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
