Chapter 8 and 9 Test

Entrepreneur

a person who organizes, manages, and assumes the risk of a business in order to gain profits

Startups

a beginning business enterprise

Small-business incubator

private or government-funded agency that assists new businesses by providing advice or low-rent buildings and supplies

Sources of help for business startups

Small Business Administration, Local departments of commerce, business-related internet sites, small-business incubators, local colleges and universities

The goal of a small-business incubator is to….

generate job creation and economic growth

4 Basic elements of business operation

expenses, advertising, record keeping, and risk

Sole Proprietorship

The most common form of business owned and operated by a single person

Proprietor

the owner of a business

Partnership

Business owned and operated by two or more individuals

Limited partnership

special form of partnership in which one or more partners have limited liability but no voice in management

Limited liability company

type of business enterprise that protects members against losing all of their personal wealth; members are taxed as if they were in a partnership

Join Venture

partnership set up for a specific purpose for a short period of time

Corporation

a business organization owned by many people but treated by law as though it were a person; it can own property, pay taxes, make contracts, and so on

Stock

represents ownership rights in a corporation that entitles the buyer to a certain part of the future profits and assets of the corporation

A major advantage to operating as a corporations is…

limited liability

You will have to file what with the state where the corporation will be headquartered

Articles of Incorporation

If approved, the state grants you what or license to operate in that state

Corporate Charter

Common stock

issued to raise funds, stockholders are granted voting rights

Dividend

portion of a corporation’s profits paid to its stockholders

Preferred Stock

can be issued to raise funds, but holders have no voting rights

Who hires the management to run a corporation?

Board of directors

Franchise

an arrangement in which a person or group obtains the right to use the name and sell the products of another business

Market Structure

what businesses are categorized or by the amount of competition they face

4 Basic Market structures

Perfect competition, monopolistic competition, oligopoly, monopoly

Perfect Competition (pure)

large market, nearly identical product, easy entry and exit to market, easily obtainable market information, independence of sellers and buyers

Under which type of market would the most competition exist?

Perfect Competition

The wheat market fulfills all five of the conditions needed to create perfect competition

True

Monopoly

when a single seller controls the supply of a good or service and largely determines its price, but cannot charge outrageous prices

4 types of monopolies

Natural, Geographic, Technological, Government

Copyright

exclusive right to sell, publish, or reproduce creative works for a specified number of years

Patent

exclusive right to make, use, or sell an invention for a number of years

A utility company would fall under which type of monopoly?

Natural

Oligopoly

an industry dominated by several suppliers who exercise some control over price

Product differentiation

what the price is based on in addition to supply and demand

Cartel

arrangement among groups of industrial businesses to reduce international competition by controlling the price, production, and distribution of goods

Collusion

Competing firms performing an illegal act by secretly agreeing to raise prices or to divide the market

Monopolistic Competition

Most common form of market structure in the U.S and competitive advertising is the key in this type of market

Interlocking Directrates

a board of directors, the majority of whose members also serve as the board of directors of a competing corporation

Antitrust legislation

federal and state laws passed to prevent new monopolies from forming and to break up those that already exist

Mergers

the legal combination of two or more companies that become one corporation

Conglomerate

a large corporation merges with smaller corporations dealing in unrelated businesses

If an oil refinery merges with a chain of gas stations, which kind of merger would this be?

Vertical

Deregulated

reduction of government regulation and control over business activity

Horizontal Merger

occurs when companies operating in the same or similar industry combine together

Vertical Merger

the merger of two or more companies that provide different supply chain functions for a common good or service

Conglomerate Merger

a merger between firms that are involved in totally unrelated business activities