Ch. 6
Equilibrium
Equilibrium
Describe Equilibrium.
The point at which Supply and Demand are equal.
Economists use this concept to assess how competitive a market is, like a rubric.
Perfect Competition.
Why would a nonprofit organization provide goods/services for free or very little cost?
Because their goal is to benefit society or the greater good, not to make a profit.
What are right-to-work laws?
Legislation that made it illegal to require workers to join unions.
Which market structure is the least competitive?
Monopoly.
What is the market outcome when Qd > Qs?
Shortage.
This type of market structure has few sellers, similar OR differentiated products, and some control over prices.
Oligopoly
This business organization has the following characteristics: Resources, training, products, etc. at low cost, access to advertising, no guarantee of success, profits shared with overseer, loss of control.
Franchise
What is the process of negotiation between businesses and their organized employees to establish wages and improve working conditions called?
Collective Bargaining
Describe Outsourcing.
The process in which businesses contract part(s) of production to a company outside their own, often in a foreign country.
Give an example of a good or service with inelastic demand.
Gasoline, milk, eggs, and other basic necessities whose demand does not significantly change in response to changes in price.
Why does perfect competition not exist in real markets?
Perfectly competitive markets do not exist in the real world because, like the markets for corn and beef, they have external factors that cause imperfections - such as government intervention through subsidies.
What does it mean when we say an organization has limited life?
When a business owner dies, retires, or gets out of the business, the business will either close or restructure itself - limited life means that the business in its original form only lives as long as its owner.
Describe the glass ceiling concept.
The artificial barrier that women and minorities have faced in the workplace; they have the skills and experience to advance, but do not get promoted.
What is the name of the table that shows different quantities demanded at different price points?
Demand schedule.
What is a minimum price set above the equilibrium price, which prevents the price from falling to equilibrium?
Price Floor.
How does competition in markets affect prices and quantities of different goods and services?
More competition in a market usually means lower overall prices and greater quantities of goods and services, due to having many sellers and many buyers in markets that are highly competitive.
What does it mean when we say an organization has unlimited liability?
The business owner is liable, or responsible, for all debts and claims against the business.
What is derived demand?
A producer's demand for labor is called derived demand because their demand for labor is derived from the consumers' demand for the goods and services that the producer provides.
What is the difference between a Horizontal and a Vertical merger?
A horizontal merger joins two firms in the same industry producing the same product, while a vertical merger joins firms at different stages of the production process.
Name each of the four types of Monopolies.
Natural, Government, Technological, Geographical
What are the three types of partnerships?
General, Limited, and Limited Liability.
Workers are the suppliers of labor, and employers are the demanders of labor.
How do you solve for equilibrium price and quantity using a system of equations?