econ unit 5

why do economics say that corporations are subject to double taxation.

Corporations pay stockholders and stockholders must pay personal income. Corporations have to pay taxes on their income because of the law that considers corporations legal

What are two ways that corporations can raise capital through stock and bond markets? Describe both.

Corporations raise money. Then they will grow by merging and combining with another corporation. As well as selling shares on stock market so that corporation can raise more amounts of capital.

conglomerates

Conglomerates give many products to choose from for the consumer. Merging more than 3 business that produce unrelated products or services

horizontal merger

Customer options can be increased with a merger. The combination of two or more firms competing in the same market with the same good or service. An example- a merger between Coca-Cola and Pepsi.

a friend says that when two people form a general partnership, it is just like two sole proprietors working together to run the same business. Do you agree or disagree? Explain.

I disagree because a general partnership is where you are splitting the responsibilities. For a sole proprietorship, yes you are working with someone else in this situation, but you still have your own responsibilities for your own company.

what disadvantage of sole proprietorships do you think keeps the most people who want to start a business from choosing that form of organization.

I think it is an unlimited personal liability. This is the biggest disadvantage because the sole proprietorships are responsible for their own business debts. They might not have enough to pay those debts.

what allows a corporation to produce and sell goods on a large scale?

Issuing stock allows the corporation to produce and sell goods on a larger scale. They can raise that money for even bigger projects in the future.

multinationals

Multinationals are very large so they sell goods and services all over the country. So multinationals enable the consumers to buy from all over the world.

vertical merger

The merger of two or more firms involved in different stages of producing the same good or service. Mergers can create greater customer satisfaction. An example- an automobile joining with a parts supplier

advantages of a sole proprietorship

an easy start up and end, relatively few regulations, sole receiver of profit, and having full control

disadvantages of a sole proprietorship

unlimited liability, limited access to resources, and lack of permanence.