economics unit 3.1-3.3

he can fucking go somewhere else

Entreprenaurs

create an idea that becomes a marketable product and accepts the risk/success as well as claims the profits/losses

New Products, New and Improved Quality, New Production Methods, New Techniques of Buisness

4 types of change an entrepreneur my introduce

New Products

A type of change that will open up a market that was non-existent

New and Improved Quality

A type of change that may improve product or service to make money

New Production Methods

A type of change where an entreprenaur may change to make costs lower

New Techniques of Buisness

A type of change where some entrepreneurs change the business model

financial capital

What do you need to start a business?

Financial Capital

Money needed to start/expand buisess

through loans, investments, savings

How can financial capital be acquired?

invent, manage

In order to be classified as an entrepreneur one must ___ AND _____

No (does not risk failure)

Is an inventor who simply works for companies an entrepreneur? Why?

No (not creating new products)

Is a manager that doesn’t invent an entreprenaur?

No (own but don’t invent/manage)

Is a stockholder that may own stock but not manager or invent an entrepreneur?

Sole Proprietorship, Partnership, General Partnership, Limited Partnership

Types of business models

Sole Proprietorship

a firm owned and run by 1 person

Partnerships

2+ people contribute resources to a business in return for a share of the profit

General Partnerships and Limited Partnerships

Types of Partnerships

General Partnerships

A type of partnership where ALL partners share both responsibility of running the business AND any liability from operation

Limited Partnerships

A type of partnership where at least 1 partner runs the business and berars the liability while the other partner(s) contribute financial capital for profit and have little liaility

Libaility

The legal obligation to pay any debts of the buisness

Corporation

A legal entity with an existence that is distinct from the people who organize, own, and run it

1. Creators apply to make a corporation through Articles of Incorporation

2. Shares of stock are issued to to the owner

3. Shareholders vote on who is on the corp. board of directors

4. Board of directors vote on CEO

5. Dividends (shares of profit) are payed to the shareholders of stock

How are corporations created?

Board of DIrectors

carry out big decisions such as who will run the company

Dividends

shares of profit

Private Corporation, Publicly Traded Corporation

Types of Corporations

Private Corporation

A type of corporation that issues stock to few people; stock is rarely bought/sold

Publicly Traded Incorporation

A type of coroporation in which stock is bought and sold at stock exchanges for anyone to buy/sell

1. Easier to raise financial capital

2. Limited Liability

3. Unlimited Life

4. Specialized Management

4 Advantages of Incorporation

Easier; more people buy stock

Is it easier of harder for corporations to make financial capital? Why?

Yes; stockholders hold little liability to corporation’s debt

Is liability limited in corporations? Why?

Yes; they can live longer than original owners

Do corporations typically have a longer lifespan? Why?

Specialized; owners and managers are separated

Are duties in corporations more specialized or do everyone do a bit of everything?

1. Difficult and costly to start

2. More gov regulation

3. Owners have less control

4. Double Taxation

4 Disadvantages of Corporations

Articles of Incorporation is a long and expensive process, legal fees

Why are corporations costly and difficult to start?

Shares of stocks are smalls and ownership does not equal power over company

Why do owners have less control in corporations?

Double Taxation

A buisness is taxed twice on the same source of income

Hybrid Buisnesses

Business types that are in-between corporations and partnerships

1. Easier to start

1. Few gov regulations

2. Complete control

3. Owner keeps all profit

4. Lower taxe

5. Pride of ownership

6 Sole Proprietorship Advantages

S Corporation

Organization that offers limited capability combined with the single taxation of buisness income; must have no more than 100 stockholders

Limited Liability Company (LLC)

a form of business ownership that offers both limited liability to its owners and flexible tax treatment

Limited Liability Partnership (LLP)

Like a LLC but now easily converted from an existing partnership

Cooperative

An organization of people who pull their resources to buy and sell more efficiently than they could individually

Not-for-profit organizations

Groups that don’t pursue profit as goal; engage in charitable, educational, humanitarian, cultural, professional, or other activities, often with social purpose

1. unlimited liability

2. difficult raising financial capital

3. limited life

4. Difficult finding and keeping workers

5. broad responsibility

5 disadvantages of sole proprietorship

1. Easy to start

2. Few government regulations

3. Shared decision-making and increased specialization

4. Greater ability to raise financial capital

5. More able to attract and retain workers

6. Lower taxes

6 advantages to partnerships

1. Unlimited personal liability

2. Limited life of the business

3. Partners may disagree

4. Profits must be shared

4 Disadvantages of partnerships

Derived Demand

The demand for a resource that comes from the demand of another resource

Productivity

the value of output the resources produce

Market Demand of Resources

As the price of a resource goes down, quantity demand goes up

Market Supply of Resources

When the price of a resource increases, the amount of resources supplied are increase

1. Change in Demand for final product

2. Changes in Prices of other resources (resource substitute, resoruce complement)

3. Changes of Technology

Occurrences that Shift the Labor Demand Curve

Resource substitute, resource complement

Types of resources involved in shifts in labor

If the cost of a resource goes up, the demand for a resource substitute will go up

Resource Substitute

If the cost for a resource goes up, the demand for the resource complement goes down

Resoruce Complement

Shifts in Labor Supply Curve Occur

1. Worker wealth changes

2. Working conditions

3. Taste for work changes