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Review What are the 4 shortcomings of GDP? What is the difference between real GDP and nominal GDP? What does per capita GDP measure? What was the per.

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Presentation on theme: "Review What are the 4 shortcomings of GDP? What is the difference between real GDP and nominal GDP? What does per capita GDP measure? What was the per."— Presentation transcript:

1 Review What are the 4 shortcomings of GDP? What is the difference between real GDP and nominal GDP? What does per capita GDP measure? What was the per capita GDP of the U.S. in 2008?

2 Business Firms People are free to risk their time and their savings to start a business If a business succeeds, they are rewarded with profit If a business fails, they could lose a bundle Most new businesses fail within the first 5 years

3 3 Types of Business Firms 1. Sole Proprietorship 2. Partnership 3. Corporations

4 1. Sole Proprietorship Simplest form of business organization Owned and managed by a single individual Earns all the firm’s profits and is responsible for all the firm’s losses About 75% of all businesses in the U.S. are owned by sole proprietorship But only make up 5% of all U.S. business sales Draw a quick symbol to represent sole proprietorship

5 2. Partnership Involves 2 or more individuals who agree to contribute resources to the business in return for a share of the profit Account for about 8% of all businesses And 8% of all business sales Draw a quick symbol to represent partnership

6 3. Corporations Is a legal entity with an existence that is distinct from the people who organize it, own it, and run it The corporation can earn a profit, lose money, be sued, and even be found guilty of a crime 15-20% of all businesses are corporations But accounts for 86.5% of all business sales Draw a quick symbol to represent corporation

7 Draw a Pie Graph Draw a pie graph that represents what percentage makes up: -Sole Proprietorship -Partnership -Corporation Draw a symbol in each slice for each Business Firms

8 Draw a Pie Graph Draw a pie graph that represents how much of total business sales each business firm makes Business Firms % of Business Sales

9 Advantages and Disadvantages Each of the 3 types of business firms has advantages and disadvantages Read the handout to figure them out!! Complete the worksheet “Advantages & Disadvantages of Business Firms”

10 In Each Group Explain the following in your own words: 1=Advantages of Sole Proprietorship 2=Disadvantages of Sole Proprietorship 3=Advantages of Partnerships 4=Disadvantages of Partnerships 5=Advantages of Corporations 6=Disadvantages of Corporations

11 After Your Group Is Done Reading… Create a visual representation of your Advantage/Disadvantage to convey the meaning to the class. Be sure to include: The name of your Business Firm If it is an Advantage or Disadvantage A summary An image Explanation of how it affects you as young adults entering the economic world

12 When your groups is done: Post it up around the room and choose one person to present. Draw the following chart and be ready to take notes,

13 Wrap-up If you started a business which one would begin? Compare the different types of business firms and explain your choice using statistics of success and advantages and disadvantages of each. ½ page minimum!


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