Economics - Chapter 3.

What is a proxy?

A ballot that gives a stockholder's representative the right to vote on corporate matters.

What is a partnership?

A business jointly owned by two or more people.

What is a sole or individual proprietorship?

A business owned and run by one person.

What is a merger?

A combination of two or more businesses to form a single firm.

What is a corporation?

A form of business organization recognized by law as a separate legal entity having all the rights of an individual.

What is a conglomerate?

A large corporation, diversified in at least four different fields that are not similar.

What is the difference between stocks and bonds?

A stock is part ownership. A bond is a written promise to repay the amount borrowed.

What are 4 weaknesses of a corporation?

Difficult and expensive to get a charter. Owners do not have much to say in how the business is run after they hire the board of directors. Has to pay income taxes. Subject to more govt regulation.

What are three weaknesses of the partnership?

Each partner is fully responsible for the acts of the other partners. Has a limited life. Could have conflict between partners.

What are 5 strengths of a corporation?

Easy to raise financial capital. Directors can hire the best management available. Limited liability. Unlimited life. Easy to transfer ownership.

What are 6 strengths of partnerships?

Easy to start. Easy to manage. No special taxes. Can attract financial capital more easily. Bigger, which makes it easier to reach efficiency. Easier to attract qualified people.

What are 6 advantages of a sole proprietorship?

Easy to start. Relatively easy to manage. The owner gets to keep all the profit. Does not have to pay income taxes. Feel a freedom because you are your own boss. Easy to get out of the business if you wanted to.

What are some reasons why businesses merge?

Efficiency, to get a new or better product, eliminate a rival, or change its image.

What are the workers hired by a corporation called?

Employees.

What is a vertical merger?

Firms involved with different steps on manufacturing come together.

What are two types of partnerships?

General and limited.

What is a horizontal merger?

Two or more firms that produce the same product join forces.

Who had the power to control a large corporation?

Yearly- stockholders; monthly- board of directors.

Proxy

a ballot that gives a stockholder's representative the right to vote on corporate matters.

Partnership

a business jointly owned by two or more persons.

Sole proprietorship

a business owned and run by a one person.

Dividend

a check representing a portion of the corporate profit.

Conglomerate

a firm that has at least four businesses, each making unrelated products.

Corporation

a form of business organization recognized by law as a separate legal entity having all the rights of an individual.

Credit union

a service made up of employees from a particular company or government agency.

Bond

a written promise to repay the amount borrowed at a later date.

Principal

the amount of money borrowed.

Unlimited life

the business continues to exist even when ownership changes.

Limited liability

the investor's responsibility for the debts of the business is limited by the size of his or her investment in the firm.

Interest

the price paid for the use of another's money.

Horizontal mergers

two or more firms that produce the same kind of product join forces.

Nonprofit organization

work in a business like way to make the best use of scarce resources. The money they make goes back into making the business better. (Schools, churches, medical facilities.)

What are some key words associated with corporations? What does each mean?

Stockholders- investors. Dividend- a check representing a portion of the corporations profits. Charter- a govt document that gives permission to create a corporation.

Who owns a corporation?

Stockholders.

What are 6 weaknesses of a sole proprietorship?

The owner is personally and fully responsible for losses and debts of the business. Difficult to raise financial capital. Proprietor must have the financial capital to hire labor and buy inventory to operate efficiently. Proprietor often has limited management experience. Difficult to attract qualified employees. Has a limited life.

What are some of the powers of the owners of a corporation?

They meet once a year to elect board members.

How are stock holders protected in a bankruptcy?

They would only lose their investment in the corporation.

Who makes the policies and goals for the operation of a corporation?

Board of directors.

What is the difference in common and preferred stock?

Common is basic ownership of a corporation. Preferred is non voting ownership of the corporation.

Who runs the corporation on a daily basis?

Officers, the president and management.

Labor union

an organization formed to work for its members' interest in various employment matters.

Stockholder

certificates of ownership and are sold to investors.

Merger

combination of two or more businesses to form a single firm.

Multinational

corporation that has manufacturing or service operations in a number of different countries.

Bankruptcy

court granted permission to not pay some or all of its debts, which forces it out of business.

Producer co-op

helps members sell their products.