Studied by 313 peopleFirms
an organization that uses resources to produce a product or service, which it then sells.
Total Revenue
the total amount of money a company receives by selling goods or services
Fixed Costs
a cost that does not change no matter how much of a good or service is produced (ex.rent, lease payments, machinery repairs)
Variable Cost
a cost that rises or falls depending on the quantity produced (ex. Raw materials, wages for hourly workers, electricity and heating bills)
Total Cost
the sum of fixed costs and variable costs (FC + VC = TC)
Marginal Cost
the addition cost of producing one more unit
Average Cost
the total cost divided by the quantity produced
Profit
the amount of money a business receives in excess of its expenses (Total Revenue - Total Cost = Profit)
Commodities
a product, such as petroleum or milk, that is considered the same no matter who produces or sells it
Monopoly
a single seller controls the market
Price discrimination
the division of consumers into groups based on how much they will pay for a good
Monopolistic competition
a market structure in which many companies sell products that are similar but not identical (ex. jeans, t-shirts, bagel stores, gas stations)
Oligopoly
a market structure in which a few large firms dominate a market (ex. air travel, automobiles, dishwashers)
Antitrust law
laws that encourage competition in the marketplace to keep firms from controlling the price and supply of important goods
Mergers
when two or more companies join to form a single firm
Sole proprietorship
a business owned and managed by a single individual
Liability
the legal obligation to pay debts
Partnership
a business organization owned by two or more persons who agree on a specific division of responsibilities and profits
Limited liability partnership
a type of partnership in which all partners are limited partners
Business franchise
a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area
Corporation
a legal entity owned by individual stockholders, each of whom has limited liability for the firm’s debts
Dividends
the portion of corporate profits paid out to stockholders
Cooperatives
a business organization owned and operated by a group of individuals for their shared benefit
Nonprofits
an institution that functions much like a business but does not operate for the purpose of making a profit
Labor supply
people willing to work for wages
Equilibrium wage
the wage rate, or price of labor services, that is set when the supply of workers meets the demand for workers in the labor market
Productivity of labor
the quantity of output produced by a unit of labor
Labor union
an organization of workers that tries to improve working conditions, wages, and benefits for its members
Collective bargaining
the process in which working people, through their unions, negotiate contracts with their employers to determine their terms of employment
Shareholder/stockholder
person, company, or institution that owns at least one share of a company’s stock. Together, shareholders own the company.
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