Economics: Chapter 8 Keyterms

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Sole Proprietorship
A business owned and managed by a single individual

Zoning Laws
Law in a city or town that designated separate areas for residency and for business

Liability
The legally bound obligation to pay debts

Fringe Benefits
Payment other than wages or salaries

Partnership
A business organization owned by two or more persons who agree on a specific division of responsibilities and profits

General Partnership
Partnership in which partners share equally on both responsibility and liability

Limited Partnership
Partnership in which only one partner is required to be a general partner

Limited Liability Partnership (LLP)
Partnership in which all partners are limited partners

Assets
Money and other valuables belonging to an individual or business

Corporation
A legal entity owned by individual stockholders

Stock
A certificate of ownership in a corporation

Bond
A formal contract to repay borrowed money with interest at fixed intervals

Dividend
The portion of corporate profits paid out to stockholders

Horizontal Merger
The combination of two or more firms competing in the same market with the same good or service

Vertical Merger
The combination of two or more firms involved in different stages of producing the same good or service

Conglomerate
Business combination merging more than three businesses that make unrelated products

17. Multinational Corporation (MNC)
Large corporation that produces and sells its goods and services throughout the world

Business Franchise
A semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

Royalty Payments
Share of earnings given as payment

Cooperative
A business organization owned and operated by a group of individuals for their mutual benefit

Consumer Cooperative
Retail outlet owned and operated by consumers

Service Cooperative
Cooperative that provides a service, rather than a good

Producer Cooperative
Agricultural marketing cooperative that helps members sell their products

Non-Profit Organization
Institution that functions much like a business, but doesn't operate for the purpose of generating profits

What are the advantages of a sole proprietorship?
Advantages of a sole proprietorship is being able to keep all the firm's profits.

What are the disadvantages of a sole proprietorship?
Disadvantages of a sole proprietorship is being responsible for the firm's debts.

What types of partnerships exist?
-General Partnership: Partnership in which partners share equally in both responsibility and liability.
-Limited Partnerships: Partnership in which only one partner is required to be a general partner
-Limited Liability Partnership: All partners are limited partners

What are the advantages of partnerships?
-Ease of start-up
-Shared Decision Making and Specialization
-Larger Pool of Capital, and Taxation

What are the disadvantages of partnerships?
Unlimited Liability and Potential for Conflict

What are the characteristics of corporations?
-Types of corporations (closely help corporations and publicly held corporations) and Corporate Structure.
- Needs to have stocks that inverters buy

What are the advantages of incorporation?
- Advantages for stockholders
-Advantages for the corporation

What are the disadvantages of incorporation?
- Difficulty and Expensive Start-up
- Loss of control
- More regulation

What types of corporate combinations exist?
-Horizontal Mergers: join two or more firms competing in the same market with the same good or service.
-Vertical Mergers: Join two or more firms involved in different stages of producing the same good or service.
- Conglomerates: Have more than three businesses that make unrelated products.

What are multinational corporations and what role do they play in the economy?
Multinational Corporations are a large corporation that produces and sells its goods and services throughout the world. They play a big role in the economy because they have franchises all over the world and make a lot of profit off of that which helps the economy as a whole.

What is a business franchise and how does it work?
A business franchise is a semi-independent business that pays fees to a parent company. In return, the business is granted the exclusive right to sell a certain product or service in a given area.

What are the advantages and disadvantages of a franchise?
Advantages: Management Training and Support, Standardized Quality, National advertising Programs, Financial Assistance, and Centralized Buying Power.
Disadvantages: High Franchising Fees and Royalties, Strict Operating Standards, Purchasing Restrictions, and Limited Product Line.

What different types of cooperatives exist? Describe them.
-Consumer Cooperatives: Retail outlets owned and operated by consumers
- Service Cooperatives: Cooperatives that provide a service, rather than goods
- Producer Cooperatives: Agricultural marketing cooperatives that help members sell their products.

a business owned and managed by a single individual, a business owned and managed by a single individual quizlet, which of the following is a business owned and managed by a single individual
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