ECON 201 Chapter Notes - Chapter 7: Opportunity Cost, Retained Earnings, Capital Market

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14 Dec 2016

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ECON 201 Full Course Notes

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Sole proprietor is the single owner of a business. Partnership: a business owned jointly by two or more individuals, who share in the pro ts and are jointly responsible for losses. Corporation or company is an organization with a legal identity separate from its owners that produces and trades. Shareholders (actionnaires) invest in corporations and therefore are the owners. Dividends are payments made from after-tax pro ts to company shareholders. Capital gains (losses) arise from the ownership of a corporation when an individual sells a share at a price higher (lower) than when the share was purchased. Real return to corporate stock is the in ation-adjusted sum of dividends and capital gain (or loss). Limited liability means that the liability (responsabilit ) of the company is limited to the value of the company"s assets (atouts). Retained earnings are the pro ts retained (gard ) by a company for reinvestment and not distributed as dividends.

Related Questions

Match Column A with Column B

1) Partnership	a) a business owned by one person who is personally liable for all losses
2) Proprietorship	b) An artificial being created by a state
3) Limited partnership	c) two or more persons combine their efforts for a single transaction
4) Corporation	d) created when shareholders elect to be treates as partners for tax purposes
5) legal capacity	e) created by an agreement between two or more persons who agree to share profits and losses
6) buy-and-sell agreement	f) provides for compensation to a deceased or withdrawing owner of a business in return for that owners interest.
7) Subchapter S corporation	g) the ability of an organization to sue or to own property
8) joint venture	h) exists when some partners are treated like shareholders for liability purposes
9) limited liability company	i) tax doctine that allows income to be taxed at the owner level, not the organization level
10) "pass through"	j) owners recieve limited liability and tax treatment as if they were a partnership without filing as a corporation.

Indicate whether the following statement best describes a corporation, a sole proprietorship, or a partnership.

a. Liability is limited to the amount invested.

b. Unlimited personal liability.

c. Unlimited liability for oneself and one's partner's actions.

d. Ability to share work and risks of ownership without issuing shares.

e. Direct control by the owner.

f. Most difficult to organize.

g. Greater ability to secure funds from outside investors.

h. Accounts for largest sales receipts in the United States.

i. The most common form of business.

aquamarinegerbil492

Question 1: Answer the following MC questions...

a).

Samuel F.B. Morse patented the (5 points)

A.	telegraph
B.	automobile
C.	audio recorder
D.	radio transmitter

b).

Your friend wants to open a clothing shop. A necessary capital resource is a (5 points)

	A. place to open the shop
	B. knowledgeable fashion manager
	C. license to conduct business
	D.highway billboard for advertising

c).

Jessica is a violinist who believes she can extend her method of learning music to early childhood education. She opens a preschool in her hometown, using her expertise to form an arts-based program. What factor of production is this? (5 points)

	A. Capital
	B. Entrepreneurship
	C. Labor
	D. Land

d).

Your friend hopes to expand her business to multiple locations. It would be best for her to create a (5 points)

	A. limited liability company
	B. sole proprietorship
	C. corporation
	D. partnership

e).

Root and Vine is a gardening collective and local delivery service started by two friends. Their clientele has grown, and they want to expand. The owners like the idea of protecting their personal property, but they want to maintain control of the business. Which type of organization might best suit their growth? (5 points)

	A. Sole proprietorship
	B. Partnership
	C. Limited liability company
	D. Corporation

f).

An oligopoly is a market for a good or service that (5 points)

	A. has few competitive firms
	B. is perfectly competitive
	C. has one buyer
	D. has one seller

g).

The greatest goal in advertising is to convince us (5 points)

	A. "wants" are unnecessary
	B. the firm has the best price
	C. a particular product is a "need"
	D. the product is the same as other firm's products

h).

"Don't be like John, who had no health insurance when he needed emergency surgery. We make health insurance easy and affordable." This advertisement targets your (5 points)

	A. fears
	B. rituals
	C. emotions
	D. social values

i).

Why do monopolies and oligarchies benefit producers over consumers? (5 points)

	A. Companies control price through demand.
	B. Competition is driven by factors other than price.
	C. Demand influences production more when competition is less.
	D. Few producers can generally control prices.

ECON 201 Chapter Notes - Chapter 7: Opportunity Cost, Retained Earnings, Capital Market

ECON 201 Full Course Notes

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