UNIT 4 TEACHER NOTES by HC120809013749

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									UNIT 4 TEACHER NOTES

Compare      Business      Sole Proprietorship: a business owned by 1 person 150
   &       Organizations   Advantages:
Contrast                   1. Easy to start
                           2. Exclusive rights to profits
                           3. Full control
                           Disadvantages:
                           1. Unlimited liability
                           2. Lack of longevity
                           3. Limited growth potential
                           Partnership : business owned by two or more         150
                           individuals who share profits and responsibilities
                           Advantages:
                           Easy to start
                           1. Specialization
                           2. Shared decision making
                           3. Shared business losses
                           Disadvantages:
                           1. Unlimited liability
                           2. Potential for conflict
                           3. Limited growth potential                         151
                           Two types of partnerships:
                           1. General: partner shares in day to day decision
                              making
                           2. Limited: (silent) partner usually is an investor
                              that contributes $
                           Corporations: business that is owned by its
                           members. Owners, called stockholders, share in
                           losses and profits by how much stock they own. A
                           large loss would hurt only stockholders that own a
                           large amount of stock. Profits (dividends) work the
                           same way.
                           Advantages:
                           1. Limited liability
                           2. Separation of ownership form management
                           3. Easy to raise capital
                           4. Longevity
                           Disadvantages:
                           1. Difficult to form
                           2. Heavily regulated
                           3. Taxed twice
                           4. Slow decision-making
Identify Characteristics   Perfect Competition:                               117
         of market         Ideal market structure where buyers and sellers
         structures        compete fully under the laws of supply & demand
                           (Fruit stand)
                           Characteristics:
                           1.many buyers & sellers act independently
                           2. sellers offer identical products
                           3. buyers are well-informed
                           4. sellers can enter &exit the market easily
                           Monopolistic Competition:                          120
                           Many buyers & sellers offer similar goods &
                           services (Jeans, clothing)
                           Characteristics:                                   120
                           1. Buyers are well-informed
                           2. Similar products…(product differentiation:
                               buyers make their product “different” =
                               “better” = charge a higher price)
                           3. Easy to enter/exit market
                           Oligopoly: noncompetitive market structure… a
                           group dominates the market. Others are afraid to
                           compete.
                           (Cereals, fast food, airlines, colas)
                           Characteristics:                                   123
                           1. Few large sellers
                           2. Difficult to enter market
                           3. Similar or identical products
                           Monopoly: single seller…worst type of market
                           structure for the consumer= no choice= higher
                           price ( movie concessions, Six Flags, cable)
                           Characteristics:
                           1. Single seller
                           2. No substitutes
                           3. Impossible to enter the market
4 TYPES OF MONPOLIES:
     A. Geographic
     B. Natural
     C. Technological
     D. Government

								
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