Sole Proprietorship
What is a Sole proprietorship?
There is no difference between the business and the owner in the eyes of the law
What is a limited partnership?
Profits are split unevenly but have no liability
What is a Corporation?
A separate legal entity, or legal being, owned by shareholders, each of whom faces limited liability for the firm’s debt
What is a Production Possibilities Curve?
A model that shows alternative ways that an economy can use its scarce resources
What is a Merger?
Combines Companies
What percent of Business Organizations are Sole proprietorships?
73%
What are general partnerships?
partners share profits, liability, and responsibility
What liability do Shareholders face?
What is graphically demonstrated in this model?
This model graphically demonstrates scarcity, trade-offs, opportunity costs, and efficiency.
What is a horizontal merger?
Firms in the same market with a similar good or service
What are the liabilities of a Sole proprietorship?
The Sole proprietor has a legal obligation to pay debts/injury settlements incurred by the business
How are profits split in a general partnership?
50-50 split
What percent of Business organizations are Corporations?
16%
What is constant opporuntiy cost?
Resources are easily adaptable for producing either good
What is a vertical merger?
Firms join two or more firms involved in different stages of producing the same good
What profits are the sole proprietor entitled to?
All of them.
What percentage of business organizations are partnerships?
About 10 percent
What percent of products are sold by corporations?
62%
What is the law of Increasing Opportuntiy Cost?
As you produce more of any good, the opportunity cost will increase
What is a conglomerate?
More than 3 large companies merge
What does taking a day off in a sole proprietorship mean for your business?
The business won't run, and will make no profits.
What are the most likely partners in a limited partnership?
Investors
How do corporations get taxed?
Each shareholder pays taxes on their share
What are the 4 key assumptions made with a Production Possibilities Curve?
Only two goods can be produced, full employment of resources, fixed resources, fixed technology
What is a franchise?
A business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee.