How Markets Works
What are characteristics of free enterprise?
incentives - profit - competition - opportunity
GreenTech Farms is owned by a single person, but the owner faces unlimited personal liability for the business's debts and legal obligations. What type of business organization is GreenTech Farms?
Sole proprietorship
In a circular flow diagram, households are primarily responsible for:
What is the difference between fiscal and monetary policies?
Fiscal policy - government spending. taxation
Monetary policy - central bank - inflation- interest rates
What are tariffs?
taxes placed on goods received from other countries (imports)
What is the purpose of the Federal Reserve?
Controls the money supply and interest rates to promote economic stability.
How do capital investments typically affect a company's productivity?
They increase productivity by funding new equipment, advanced technology, and employee training programs.
Which economists advocated for the idea of the "invisible hand" guiding free markets?
Adam Smith
North American Free Trade Agreement - between Canada, USA and Mexico to reduce trade barriers
What is a mortgage?
A loan with an installment plan for real estate.
Natural monopolies typically arise in industries where:
A. Many firms compete fiercely for market share
B. Economies of scale lead to a single, efficient producer
C. Government regulations encourage competition
D. Consumer preferences are highly variable
What happens when the demand for a skill is low, but the supply of workers with that skill is high?
The pay rate for that skill decreases.
Opportunity cost is best defined as:
The potential gain that is given up when choosing one option over an alternative.
On a Production Possibility Curve, what is attainable?
Every point on and inside the curve
If the price of a good changes and the demand drastically changes as well, what does this demonstrate?
Elastic Demand
Double Jeopardy
Perfect Picture Cameras
Perfect Picture Cameras is a national camera company. It competes with a couple of other national camera companies. In order to gain an upper hand in the market, Perfect Picture Cameras has differentiated its camera by including an automatic focus and flash. Perfect Picture Cameras has the ability to raise its prices because of its unique features. However, federal regulators are always watching the company to ensure that no collusion occurs with other camera companies.
What type of market structure does this company represent?
Oligopoly
The name of a merger where both businesses operate in the same sector.
Horizontal merger
Which two economic systems have the LEAST in common?
Command Economy and Free Market (Capitalism)
Name two types of retirement accounts.
401 k - 403b - IRA - Roth IRA -
What is the S.E.C in our government?
The Securities and exchange commission the protects investors.
Know the FDIC( protects money in banks) and the FTC as well Federal Trade Commission (enforce laws/protects consumers)
What are fixed and varied expenses?
Fixed expenses (expenses that are the same every time - mortgage, car note, insurance) plus varied expenses (expenses that are different every time - gas, food, etc.) equal total expenses
Fixed + Varied = Total
Which of the following is an accurate statement about minimum wage laws in the United States?
Look at the image what is represented by Letter E
Some states have established a higher-than-federal minimum wage.
All resources are not being used.
In a circular flow diagram, what occurs in the product market?
Firms supply goods and services to households.
Name the three functions of money.
Medium of Exchange
Unit of Account
Store of Value
What are M1 and M2?
Both are types of money supplies
M1 - currency in circulation
M2 - all of M1 and reserves or savings, etc