Chapter 8 Economics textbook questions

Business organization and sole proprietorship

A business organization is an enterprise that produces goods or provides services. The most popular type of business organization in the US is the sole proprietorship, a business owned and managed by a single person.

Suppose cosmic comics becomes very successful, and Bart decides to try opening a second store. What issues should Bart consider? What challenges will he face?

As cosmics is successful bart will have face many difficulties like market share , price determination, quality control, etc

How do corporations raise money

Corporations raise money through the sale of stock and the issuing of bonds.

If the two largest bottled water manufactures consolidated in a horizontal merger what might be effect be on competition

If the two largest bottled water manufacturers consolidated in a horizontal merger, competition would go down.

Franchise

McDonald's is a franchise, a business made up of semi-independent businesses that all offer the same products or services.

What are benefits of combining several companies to form a conglomerate? name in example of a conglomerate

The combination, or "merger," of two companies that are involved in totally unrelated industries, business activities, or geographic areas, is referred to as a "conglomerate merger." A popular method of extending a range of products, or growing corporate territory in the 1960s and 1970s, conglomerate mergers rarely result in immediate financial benefits for either company, and so are seldom seen today. To explore this concept, consider the following conglomerate merger definition.

In what ways do the increased resources of a partnership help a business?

The increased resources of a partnership make it easier to get bank loans for business purposes and attract and keep workers

What are the main advantages of a corporation

The main advantages of a corporation are having greater access to resources, professional managers, limited liability, and unlimited life.

What are the main advantages of a franchise

The main advantages of a franchise are that they give franchisees independence, franchisers provide good training in running the business and provide proven products and other materials, and franchisers pay for advertising

What are the main advantages of partnership

The main advantages of a partnership are that they are easy to open and close, face few regulations, have greater access to resources, involve joint decision making, and allow for specialization.

What steps do new proprietorships usually need to take before they can open?

Before new sole proprietorships can open, prospective business owners must raise funds and complete legal steps like obtaining a business license and a site permit.

Limited partnership and limited liability partnership

A limited partnership is a partnership in which at least one partner is not involved in the day-to-day running of business and is liable for only the funds he or she has invested. When all partners are limited partners and are not responsible for the debts and other liabilities of other partners, it is a limited liability partnership.

What traits would you look for in a potential partner?

For a potential partner I would look following traits: 1) Good managing quality 2) Good verbal quality 3) Who could influence other people 4) Who is future looking 5) Efficient person

What are the main advantages of a sole proprietorship?

The main advantages of a sole proprietorship are that these businesses are easy to open or close, face few regulations, give the business owners freedom and control, and let the owners keep the profits.

Merger and conglomerate

A merger is the combining of companies, and one type of merger is a conglomerate, which results from a merger of companies that produce unrelated goods or services.

What is a multinational corporation

A multinational corporation is a large corporation with branches in several countries.

Partnership and general partnership

A partnership is a business co-owned by two or more people who agree on how responsibilities, profits, and losses will be divided. The most common type of partnership is a general partnership, where partners share responsibility for managing the business and are all liable for business debts and losses.

In what ways might be vertical merger in the oil industry influence gas prices

A vertical merger in the oil industry might decrease gas prices because the production (refining) and distribution are combined, which increases efficiency.

What is the difference between a vertical merger and a horizontal merger

A vertical merger is the combination of companies involved in different steps of production or marketing of a product or service, while a horizontal merger is the combination of companies that offer the same or similar products or services.

Who gets the profits from a sole proprietorship? Who s to pay all the debts?

In a sole proprietorship, the business owner gets the profits and has to pay all the debts.

Limited life and unlimited liability

Sole proprietorships have limited life and unlimited liability. Limited life means that a business ceases to exist if the owner dies, retires, or leaves the business. Unlimited liability means a business owner is responsible for all the losses, debts, and other claims against the business.

What are the main disadvantages of a corporation

The main disadvantages of a corporation are having large start-up costs and effort, heavy regulation, double taxation, and loss of control.

What are the main disadvantages of a franchise

The main disadvantages of a franchise are that there is no assurance of success in the franchisees, profits must be shared with the franchiser, and franchisees do not have control over some aspects of the business.

What are the main disadvantages of partnership

The main disadvantages of a partnership are that they give partners unlimited liability, have a potential for conflict, and have limited life

What determines how partners will divide responsibilities, profits, and debts?

The type of partnership, which can be general, limited, or limited liability, determines how partners will divide responsibilities, profits, and debts.

What are the main disadvantages of a sole proprietorship?

main disadvantages of a sole proprietorship are that the businesses have limited funds, limited life, and unlimited liability.

Explain how franchisees share the risk of the business venture with the franchiser.

Franchisees share the risk of the business venture with the franchiser because they need to invest money in the business with no assurance of success.

Stock and bond

The sale of stock and the issuing of bonds are the key methods corporations use to raise money. A stock is a share of ownership in a corporation, and a bond is a contract that the corporation issues that promises to repay borrowed money, plus interest, on a fixed schedule

Public company and private company

To whom corporations sell stock determines whether it is a public company or a private company. A public company issues stock that can be freely bought and sold, while a private company retains control over who can buy or sell the stock.