Econ Exam

What are the factors of production? and what is meant by each?

• land: oil, water, and forests

• labor: work

• capital: human made/ knowledge made

• entrepreneur

what happens in a factor market?

• Factors of production are bought and sold including land labor and capital.

• Physical flow is outputed from households and imported to firms and monetary flow is outputed from firms into households.

• Physical flow is outputed by firms and inputted into households

• monetary flow is outputted by households and imported into firms

What happens in a product market?

• Physical flow is outputed by firms and inputted into households whereas monetary flow is outputted by households and imported into firms

• Demand for product markets comes primarily from households

• Different kinds of firms sell goods

• wages and rents contribute into product markets

what is a vertical merger?

•  two separate companies who sell different products form a merger and create a product together

• two competing companies merge to increase market share and end competition 

what is a horizontal merger?

• two competing companies merge to increase market share and end competition 

•  two separate companies who sell different products form a merger and create a product together

What are the advantages of a partnership?

• limited liability

• flexibility in financing

• the owners can deduct losses

what is the advantage of a corporation?

• limited liability

• the owners can deduct losses

•  flexibility in financing

What is a dividend?

• Trading between two or more countries using their own free will

• When one or more individuals are liable for their company’s taxation and debts

• Regular payments of profit to investors who own a company’s stock

What is unlimited liability?

• Trading between two or more countries using their own free will

• When one or more individuals are liable for their company’s taxation and debts

• Regular payments of profit to investors who own a company’s stock

What is the law of demand?

• Opposites; when prices decrease, demand increases and when prices increase, demand decreases.

• similar, when prices decrease, demand decreases and when prices increase, demand increases.