Economics Quiz: Monopoly and Production

Monopoly

• A monopoly has a unique position in the market
• If a monopolist raises prices, they don't lose customers to competitors, as they control the market
• The monopolist controls the market supply and output

Production, Inputs, and Outputs

• Production involves combining factors like land, labor, and capital to create goods and services that satisfy consumer needs
• Inputs include land (natural resources), labor (human effort), capital (machinery and tools), and entrepreneurship (organizing the other factors)
• Outputs are the goods and services produced through the production process

Classification of Inputs

• Land: Natural resources (e.g., forests, minerals)
• Labor: Human effort and skill (e.g., physical and mental)
• Capital: Tools, machinery, and buildings used in production
• Entrepreneurship: Planning, organizing, and managing the other factors of production

Final, Intermediate, and Goods

• Final goods: Goods and services ready for consumption (e.g., clothes, notebooks)
• Intermediate goods: Goods used to produce other goods (e.g., tires used for car production)
• Capital Goods: Goods used in the production of other goods

Technology

• Technology is the body of knowledge that applies to how goods are produced
• It can be classified into two broad categories: Labor-intensive and Capital-intensive

Labor-Intensive Technology

• Employs more labor resources than capital resources
• Used in economies where labor is abundant and cheap
• Examples include agriculture and some manufacturing sub-sectors

Capital-Intensive Technology

• Employs more capital resources than labor resources
• Used in industrialized economies where capital is cheaper than labor
• Examples include industries in countries like Germany, Japan, South Korea, and the USA

Forms of Business Enterprises: Sole Proprietorship

• Owned by a single person
• Easy to establish, with few requirements
• The owner makes all decisions and keeps all profits
• Limited ability to raise capital and expand
• Unlimited liability (owner's personal assets are at risk)

Forms of Business Enterprises: Partnership

• A business owned by two or more people
• Easier to form than a corporation, with fewer requirements
• Decision-making is shared among the partners
• Easier to obtain capital compared to sole proprietorship
• Each partner has unlimited liability (personal assets are at risk)
• Partnership agreement can be oral or written (written preferred when real property is involved)
• Flexibility and efficiency in operation, as two heads are better than one in a partnership business