Econ Chapter 8 and 9 Test
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5 Advantages of a sole proprietorship:
- Ease of start up
- Relatively few regulations
- Sole receiver of profit
- Full control
- Easy to discontinue
2 Disadvantages of a sole proprietorship:
- Unlimited personal liability
- Lack of permanence
3 Types of partnerships:
- 1. general partnership
- 2. Limited partnerships
- 3. Limited liability partnership
3 Advantages in Partnerships:
- 1. Ease of start-up
- 2. Shared decision making and specialization
- 3. Larger pool of capital
2 Disadvantages of Partnerships:
- 1. Unlimited liability
- 2. Potential for conflict
2 types of Corporations:
- 1. Closely held
- 2. Publicly Held
4 Advantages of Incorporation:
- 1. Limited Liability
- 2. Transferable ownership
- 3. Ability to attract capital
- 4. Long life
4 Disadvantages of Incorporation:
- 1. Expense and difficulty of start-up
- 2. Double taxation
- 3. Potential loss of control by the founders
- 4. More legal requirments and regulations
Name and explain the 3 types of Corporate Combonations:
- 1. Horizontal Mergers: when you join 2 or more firms competing in the same market with the same good or service. Ex: 2 automaker, Chrysler Corporation and Daimler-Benz, merged to form DaimlerChrysler in 1998.
- 2. Vertical Mergers: when you join 2 or more firms involved in different stages of producing the same good or service. They control all phases of production, rather than rely on the goods or services of outside suppliers.
- 3. Conglomerates: when firms buy other companies that produce totally unrelated goods or services. Like Johnson and Johnson.
What is a Multinational Corporation? Give an example.
A large corporation that produces and sells its goods and services throughout the world. Ex: McDonalds.
Advantages of Multinationals:
- Provide jobs and products through the world
- Spread new technology and production methods
- Jobs raise standard of living
Disadvantages of Multinationals:
- Negatively influence culture and politics in the countries in which they operate
- The wages are low
6 Advantages of Franchises:
- 1. Built in reputation
- 2. Management training and support
- 3. Standardized quality
- 4. national advertising program
- 5. financial assisstance
- 6. centralized buying power
4 Disadvantages of Franchises:
- 1. high franchising fees and royalties
- 2. strict operating standards
- 3. purchase restrictions
- 4. limited product line
3 Categories of Cooperative Organizations:
- 1. Consumer Cooperatives
- 2. Service Cooperatives
- 3. Producer Cooperatives
What is a Nonprofit Organization? Give 3 examples.
Institution that functions much like a business, but does not operate for the purpose of generating profits. Ex: Hospitals, museums, and YMCA.
What are professional organizations?
Nonprofit organizations that works to improve the image, working conditions, and skill levels of people in particular occupations. Ex: The American Medical association(PO) opposes advertising. It believes doctors present a less professional, authoritive, and caring image if they advertise for patients.
What are business associations?
Nonprofit organization that promotes collective business interests for a city, state, etc., or for a group of similar businesses.
3 requirements for the employed:
- Worked for 1hr for pay in the past week
- Worked 1hr or more but were unpayed in a family business.
- Held a job but didn't work to do vacation, illness, labor disputes, or bad weather
2 Requirements for the Unemployed:
- Temporarily out of work
- They are not looking for a job but have looked for one in the past 4 weeks
What were the historical trends from the Bureau of Labor Stistics?
The labor force in relation to U.S. population increased from 59.2% in 1950 to 66.6% in 2003 to 68% in 2010
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