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Business 101- Exam 1 Review With Complete Solutions
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Business 101- Exam 1 Review With Complete Solutions
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Business 101- Exam 1 Review With CompleteSolutions
Know the difference between the revenue that a company brings in and the cost of generating the
revenue (know what that's called) Answer:
Know about mixed markets Answer: A mixed market economy relies on both markets and the
government to allocate resources. We've already seen that this is what happens in socialist economies
in which the government controls selected major industries, such as transportation and health care,
while allowing individual ownership of other industries.
Know about supply and demand Answer: -Supply is the quantity of a product that sellers are willing
to sell at various prices.
-Demand is the quantity of a product that buyers are willing to purchase at various prices.
-In a market characterized by perfect competition, price is determined through the mechanisms of
supply and demand. Prices are influenced both by the supply of products from sellers and by the
demand for products by buyers.
Know how to explain an equilibrium price Answer: The price at which buyers are willing to buy the
same amount that sellers are willing to sell
Know something about the different type of monopolies Answer: -Natural monopolies include
public utilities, such as electricity and gas suppliers.
They inhibit competition, but they're legal because they're important to society. Costs are minimized by
having a single supplier Ex: Sempra Energy Utility.
-A legal monopoly arises when a company receives a patent giving it exclusive use of an invented
product or process for a limited time, generally twenty years.
-Geographic monopoly- small town, because of its location no other business offers competition Ex:
Girdwood gas station.
, -Government monopoly- government owned and operated business Ex: USPS.
-Technological monopoly- a firm or individual have discovered a new manufacturing technique or
created something entirely new Ex: Segway
Know something about GDP Answer: The market value of all goods and services produced by the
economy in a given year
Know the difference between macro and micro economics Answer: Macroeconomics- The study of
the economy as a whole. Microeconomics- The study of the economic choices of individual consumers
and businesses
Know the difference between trade surplus and trade deficit Answer: -If a country sells more
products than it buys, it has a favorable balance, called a trade surplus.
-If a country buys more than it sells, it has an unfavorable balance, or a trade deficit
Know how to explain balance of payments Answer: The difference, over a period of time, between
the total flow of money coming into a country and the total flow of money going out
Know the different types of corporations Answer: -Privately-Held Corporation- Stock is held by only
a few individuals, not to be sold to the general public.
-S-Corporation- Chosen to limit the liability of its owners and avoid having their earnings taxed twice
(first at corporate level and then at personal level). A disadvantage is that the owners have no flexibility
in the way profits are divided among the owners.
-Limited Liability Corporation (LLC)- Chosen to limit the liability of its owners and avoid having their
earnings taxed twice.
-Cooperative- A cooperate is also known as a Co-Op. Owned by those using its services. A special form of
corporation that places ownership and/or control of the corporation in the hands of the employees or
patrons of the corporation.
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