Business Organizations and Competition Microeconomics Business Organizations and Competition Purpose: Discuss the various forms businesses.

Horrible Business Activity Develop an idea for a HORRIBLE business and answer the following questions: What is your product, or service? Where should you locate the business? How much should you charge for the products or service? How will you split the profits? Who is responsible for the losses?

I. Goals Identify the advantages and disadvantages of owning a sole proprietorship or partnership. Describe the three types of partnerships. Provide examples of sole proprietorships and partnerships.

II. Types of Business Organizations Sole Proprietorships Partnerships Corporations Business Franchises

III. Sole Proprietorships Advantages Least regulated Easy to start Owner in full control Sole receiver of profit Disadvantages Lack of permanence Unlimited personal liability Limited on access to resources

IV. Partnerships General Partnership Limited Partnership Partners share equal responsibility Limited Partnership One partner has liability while others only contribute money Limited Liability Partnership All partners are limited

IV. Partnerships Advantages Disadvantages Has more stability and access to resources Easy to start up Shared decision making and specialization Not subject to double taxation Disadvantages All partners share liability (general partnerships) Potential for conflict and disagreements Death of one partner may end the business if they cannot be replaced