Role of Business - Unit #3 Review Sheet

Vocabulary practice flashcards covering business organizations, stock market terminology, and market structures from Unit 3 review notes.

Sole Proprietorship

A business owned and run by just one person.

Unlimited Liability

A condition in a business where the owner or general partners bear full personal responsibility and risk for the debts and liabilities of the business.

Partnership

A business owned by two or more people.

General Partnership

A partnership arrangement where partners share management control and business liability.

Limited Partnership

A partnership arrangement involving investors who take on limited financial and legal risks.

Silent Partner

A partner who invests money into a business but does not participate in day-to-day management.

Corporation

A large business recognized legally as its own entity separate from its owners.

Board of Directors

An elected group of people who oversee and make major decisions for a corporation.

Stockholders / Shareholders

People who own partial shares of a corporation.

Double Taxation

A tax situation in which corporate profits are taxed twice—once as corporate income, and again as personal income.

Franchise

A business model where an owner pays a fee to operate a major company (e.g., McDonald's).

Common Stock / Shares

Units of ownership in a company that give the holder voting rights and a share of profits.

Brokerage / Trade Commission

The fee paid to a broker or trading platform to buy or sell stock for an investor.

Interest

The cost paid for borrowing money, or the earnings gained on an investment.

Dividend

A portion of a company's profit paid directly to its shareholders.

Bond

A loan an investor makes to a government or corporation in exchange for regular interest payments.

Mutual Fund

An investment company that pools money from many people to buy stock.

Bull Market

A period when stock prices are rising and the economy is strong.

Bear Market

A period when stock prices are falling and investors are cautious.

Dow Jones ("The Dow")

An index that tracks $30$ major public U.S. companies to show overall stock market health.

Four Identifiers of Market Structure

The $4$ key characteristics used to evaluate a market structure: number of sellers, type of product, ease of entry, and control over price.

Perfect Competition

A market structure characterized by lots of competitors, virtually identical products, open market entry, and prices determined by supply and demand rather than individual competitors (e.g., agricultural products like apples).

Monopolistic Competition

A market structure where many businesses compete with open entry and similar products that are a little different, competing locally based on factors like location (e.g., a donut shop in Downey).

Oligopoly

A market structure dominated by a few big companies or major corporations that set prices in the industry (e.g., airlines).

Price Wars

A competitive scenario where dominant businesses aggressively adjust prices to compete for market share.

Collusion

Coordinated action among a few dominating corporations in an oligopoly market.

Monopoly

A market structure with only one seller, a specific product with no direct competitor, high barriers to entry, and full control over pricing.

Natural / Government Monopoly

A monopoly permitted or regulated by the government because it provides an essential public service.

Geographical Monopoly

A monopoly that exists because a single seller operates in an isolated physical location with no local competition.

Technological Monopoly

A monopoly created when a single firm controls a manufacturing method or technical invention.

Patent

A government grant giving an inventor exclusive rights to produce and sell an invention without competition.

Public Utilities

Essential public services that serve as a primary example of a natural or government-regulated monopoly.