Market Basics How competition can affect price and production Michael Quinones, NBCT .

Market Basics

How competition can affect price and production

Michael Quinones, NBCTwww.socialstudiesguy.com

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Question of the Day

How do markets and businesses affect the price of goods and services?

Competition in business is Competition in business is alwaysalways a good thing a good thing AgreeAgree Disagree Disagree Provide at 2-3 sentences explaining why you chose to agree or disagree.

Key Vocabulary Terms:Describe and Explain the following in your own words [this will help you answer your QOD because of the examples you can use from what you learn].

Buyers Sellers Monopoly Oligopoly Conglomerate

Corporation Partnership Sole

Proprietorship Stock Stock Market

Buyers

In any market there are always people willing to buy.

How much people will buy depends on need and prices.

Sellers The desire of a

business to earn money provides opportunity to sell to consumers.

What is the Goal of a seller?

Making a profit. The financial increase

in wealth after all costs.

Aggressive Practices by businesses

[Sometimes illegal]

Greed: the desire for more than your fair share.

Drives some to break laws.

Monopoly: a single business that seeks to eliminate competition by forcing competitors out of business.

John D. Rockefeller

Business ruled by a mob Some business team up to

support common interests.

These are called oligopolies.

Goal?

To control a market’s prices.

Example: OPEC-The Organization of the Petroleum Exporting Countries (OPEC) is made up of Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela;

Merger

When two or more closely tied companies combine forces.

Companies often maintain separate identities.

One common owner of all the companies.

Media Conglomerate Time Warner

Conglomerate

A large, sometimes multinational, company with a variety of businesses.

What are the advantages?

Cross promotion and sharing of resources allows flexibility.

Sole proprietorship

A business that has no legal separation from its owner.

Most common business type in the world.

Often called a Mom & Pop business.

Partnership Least common type of

business in the U.S.

Owned by multiple people.

Examples? Sanford and Son, Johnson and

Johnson, Siegfried and Roy. Advantages? Shared capital, shared

responsibility, shared workload.

Disadvantages? More than one idea about how

to solve problems, potential for conflict.

Corporation An entity formed

to legally operate as a separate person.

Formed to protect persons [business owner]from debts, obligations and liabilities.

Corporation

This entity can own property, land and other assets.

Corporations usually owned by numerous people (stock holders).

Often controlled by a board with officers: Chairman, president, treasurer, directors.

Stock In order for

corporations to generate capital they often issue stock.

Individual portions, shares, of ownership in a company.

Share prices vary from pennies to thousands of dollars in value.

Stock Every major American

corporation issues stock.

Some companies issue dividends which are quarterly payments to share company profits.

Some companies issue bonds which constitute loan agreements between a company and investors.

Stock Market Shares of stock trade

daily on stock markets worldwide.

N.Y.S.E., N.A.S.D.A.Q. and the A.M.E.X. include the major American exchanges.

Billions of shares change

hands daily.

Stock Market People who handle stock

transactions are called brokers.

Fees charged for transactions are called commissions.

Investing is risky because stock values can rise and fall rapidly.