Economics Chapter 8, Section 3
How can a corporation grow even larger?
By combining with other corporations
What is one way for a business to increase investment?
By forming a corporation
What is a disadvantage of Incorporation?
Expense and difficulty to start up, Double taxation, potential loss of control, and more legal requirements and regulations
What are some advantages for incorporation?
Limited liability for owners, Transferable ownership, ability to attract capital and long life
What are people who own stock called?
Stockholders
What are multinational corporations?
The world's largest corporations produce and sell their goods throughout the world. They usually have headquarters in one county and branches in other countries.
What are advantages of multinational corporations?
They benefit consumers and workers worldwide by providing jobs and products around the world, and they spread new technology.
What are the disadvantages of multinationals?
They unduly influence the culture and politics in the countries in which they operate.
What is stock?
a certificate of ownership in a corporation
What is a publicly held corporation?
a corporation that has many shareholders who can buy or sell stock on the open market.
What is a closely held corporation?
a corporation that only issues stock to a few people, often family members. These stock holders rarely trade, but pass it on to family.
What are bonds?
a formal contract to repay borrowed money with interest at a fixed rate
What is a corporation?
a legal entity, or being, owned by individual stockholders, each of whom faces limited liability for the firm's debt.
What is a horizontal merger?
joining of two or more firms competing int eh same market with the same good or service. they may decide to merge if the newly resulting firm would result in economies of scale or would otherwise improve efficiency.
What is a vertical merger?
joining of two or more firms involved in different stages of producing the same good or service, can allow a firm to operate more efficiently, can control all phases of production
What are some advantages for the corporations?
more potential for growth, can raise money to purchase capitol, raise money by borrowing it.
If you own stock in a corporation, you are ___________?
part-owner
What is a conglomerate?
some firms buy other companies that produce totally unrelated goods or services, they have more than three businesses that make unrelated products. and, no one business earns the majority of the firm's profits
Corporations account for 20% of all businesses, yet sell about ____% of all products sold to the nation.
90
What is Long Life?
it does not end with the death of the owner
What are corporate combinations?
as a corporation grows, owners may decide to merge or combine the firm with another company
Why is a corporation defined as an entity?
because it has legal identity separate from those of it's owners
What are some advantages for stock holders?
gain the benefit of limited liability and more flexibility than other ownership forms
