There are three basic forms into which U. businesses have chosen to organize: proprietorship, partnership, and corporation.
1. A single individual that makes the business decisions, receives all the profits, & is legally responsible for all the debts of the firm owns a proprietorship.
a. Advantages: a proprietorship is easy to form and dissolve; all decision-making powers reside with the sole proprietor; a proprietorship is taxed only once.
b. Disadvantages: the proprietorship faces unlimited liability for debts of the firm & has limited ability to raise funds; the business normally ceases to exist with the death of the proprietor.
2. Two or more who share profits or losses owns a partnership.
a. Advantages: partnerships are easy to form, experience relatively low costs of monitoring job performance, permit more specialization than sole proprietorships, & are only taxed once.
b. Disadvantages: partnerships face unlimited liability & more difficulty in decision-making (relative proprietorship); dissolution of the partnership is usually necessary when a partner dies or leaves the partnership.
3. A corporation is a legal entity that may conduct business in its own name, just as an individual does. The owners of the corporation are its stockholders.
a. Advantages: shareholders enjoy limited liability; a corporation continues to exist even if some owners cease to remain owners; a corporation has the ability to raise large sums of money for investments.
b. Disadvantages: owners are subject to double taxation because corporations pay taxes on profits & shareholders pay taxes on dividends received; ownership & control are separated in a corporation.
i. Professional managers, who may have little or no ownership in the firm, may pursue their own, not shareholder-owner interest.
ii. Shareholders may experience high costs to monitor the behavior of professional managers.
4. Stocks, bonds, & reinvestments of retained earnings are the most important sources of corporate financing.
... was initially designed to care for retired Americans by providing an annual income they could live on. For today's workers, the future of Social Security is an uncertainty, and today's economics play a big role in whether or not it will be around for you and I once we are ready to retire. According to the Social Security Administration, the current numbers of ... ...
... economy takes a turn for the worst, the government must intervene to save the economy. Keynes can be explained through six simple principles. The first three tenets of Keynesian economics describe how the economy works. The Keynesian theory states that aggregated demand is influenced by many different economic decisions, both private and public, which sometimes causes the economy to ... fully efficient economy-- in his terms, fully employed-- but otherwise, government spending is chiefly important in order to approach 100% efficiency. Another example of the successes caused from Keynesia...
... way they have in SEA three major differences become apparent: 1. the presence of an economically strong minority (the Chinese) 2. formation of conglomerates 3. the strong presence of the state in economics In Thailand, Malaysia and Indonesia the Chinese play a large part in the economic life and they exert more economic power than any other ethnic group. Conglomerates such as the Salim ... results of the 1960-70's boom. Such conglomerates are usually very diversified and tend to dominate especially banking, thereby reversing the traditional role of banks. A strong state presence in econo...
... the problems of society. To satisfy its members, an economic system is expected to provide goods and services and to provide employment, security, equality of opportunity, equity, and progressiveness (Basic Economics Richard S. Eckaus). Eckaus went on to say that it must operate within three types of constraints: 1. The limits of technical knowledge 2. The limits of the productive resources available 3. The ... of both. Scarcity, in turn, creates the necessity of making choices among alternatives. The study of the manner in which choices are made is one of the central themes of economi...
... not necessarily financial maximizers in different situations, as well as why people make decisions irrationally. Explanation of the Article The theory of behavioral economics explains why economic agents often make decisions that are not in their best interests. An example would be how gamblers at a casino ... interests. Facts such as these make you think about how different it is than the standard model of the human classical economics and neoclassical economics that have been used for decades. The stereotypical human is expected to use logical and rational self-serving decisions tha...
... economists, each one according to the school he follows. "The Theory of Moral Sentiments" discussed one of the most important and magnificent ideologies of economics, that ideology was the Invisible Hand. But what is the invisible hand? It was said in the book written by Heilbroner that the "Invisible ... community". 32 Laissez-faire is one of the most remarkable theories that Adam Smith added to it. Samuelson and Nordhaus in their book "Economics" illustrated that the Laissez-Faire as" government interference as little as possible in economic affairs and leave economic decisions to the ...
... the economy. There is no personal opinion involved. It is capable of refutation. For instance, an increase in government spending on health care leads to a higher GDP. In contrary, normative economics is the study and presentation of policy prescriptions involving value judgments about the way in which scarce resources are allocated. It involves personal opinion and it is bias. Normative ... , today we can understand a rise in oil price in the past was due to a restriction in the supply of oil by OPEC. From this study of causes and effects (positive economics) by gathering data or perfor...
... Stock Exchange marked the place where Ricardo would not only build his fortune and succeed even more than his father, but also where he would obtain his basic grasp of economics. In 1793, he decided to marry a woman named Priscilla Wilkinson who was a Quaker; his decision caused a schism between his Jewish family and him. This rift led him to break off ... other fields such as chemistry, literature, and mathematics. During this time, he came across a work of Adam Smith called The Wealth of Nations. Adam Smith's work inspired him to study economics for ten years and write many of his own...
... Academy of Sciences. A person who receives this award is known to be great in his or her work, accomplished significant workings, and or made major innovations in the field of economics. Along with this prestigious award, the winner also receives a gold medal, a diploma bearing a citation, and a whopping one million dollars (1). The Nobel Prize is the first international award given yearly since ... not one of them. But in 1969 it was judged and administered the same way as these five. How do people get elected to win the Nobel Prize for Economics? The Economics prize is made on the bas...
... and institutions within a society make choices and how these choices determine the use of the society's scarce resources. Choices matter, because resources ore limited while wants are unlimited. Economics focuses on the production, distribution, and consumption of goods and services. Production is the creation or addition of utility. Utility is the ability of a good or service to ... the higher standard of living. A nation should not consume everything it produces, but should channel a portion of its output into capital and technological development. The study of economics can be divid...
