Review for Exam 1 Flashcards
(49 cards)
Advantages for a sole proprietorship
You are the sole owner
Keep profits
Simple tax structure
Creative liberties
Advantages of a corporation
More access to capital
May sell stock
Limited liability
Perpetual life
Advantages of a partnership
Easy to start
Inexpensive to start
Not everything is on you
Shared accountability
Taxes: easy to file and no corporate income tax
Average business cycle
5 years
Cash receipts for Partnerships in the US
$24.2 Trillion
Cash receipts for Sole Proprietorships in the US
$1.6 Trillion
Competitive
Lots of activity, lots of businesses, lots of choices
Example: Restaurant Industry
Competitive Continuum
Competitive, Oligopolies, Duopoly, Monopoly
Contraction
A period of economic decline marked by falling real GDP. Job reports start falling, Unemployment rises, Output lowers, Debt rises. Consumer spending decreases.
Corporations
Established in 1819
Disadvantages for a sole proprietorship
100% responsibility
100% funding (limited access to capital)
Unlimited liability
Disadvantages of a corporation
Corporate income tax
More difficult to start
More expensive
Learn rules and regulations
Longer times for decisions
Disadvantages of a partnership
Share the profits
100% responsibility (unlimited liability)
Managerial disagreements
double-dip recession
When an economy goes into recession twice without having undergone a full recovery in between.
Duopoly
Oligopoly consisting of two sellers
Examples of monopoly breakups
1911: Rockefeller, Standard Oil
Made 34 firms
1984: American Telephone and Telegraph
Made 7 businesses or “Baby Bells”
1999: Bill Gates, Microsoft
Led to allowance of other software besides Microsoft on Microsoft devices
Expansion
A period of economic growth as measured by a rise in real GDP. Job reports rise. Unemployment falls. Output rises. GDP rises. Consumer buying increases.
How to set up a corporation
Write a corporate charter at state level
Write articles of incorporation (submit to the Secretary of State in your state)
Decide if you are a open or closed corporation?
Closed: Stock is not sold to the public can be called privately held corporation
Open: Stock is sold to the public, can be called a publicly traded corporation
Longest expansion of the US economy on NEBR Record
146 months. From June 2009 to February 2020.
Monopoly
One seller
Big Business
Barriers to entry
No choice
NBER
National Bureau of Economic Research, private nonprofit in Cambridge, MA. Tracks and analyzes economic numbers.
Net Income for Corporations in the US
$2,000 Billion
Net Income for Partnerships in the US
$761 Billion
Net Income for Sole Proprietorships in the US
$355 Billion
