Presentation is loading. Please wait.

Presentation is loading. Please wait.

Microeconomics Business Organizations. Microeconomics: Overview Study of individual businesses and households SMALL scale decisions –A firm’s business.

Similar presentations


Presentation on theme: "Microeconomics Business Organizations. Microeconomics: Overview Study of individual businesses and households SMALL scale decisions –A firm’s business."— Presentation transcript:

1 Microeconomics Business Organizations

2 Microeconomics: Overview Study of individual businesses and households SMALL scale decisions –A firm’s business decisions about employees –Entrepreneurs’ decisions about how to organize their businesses Supply, demand, and prices in the market of a specific product –Oil Market –Real estate market Marginal cost and marginal revenue for a business

3 Business Organizations Sole Proprietorship Partnership –General –Limited Corporation ALL of these have advantages and disadvantages for you, the entrepreneur

4 Sole Proprietorship ADVANTAGES Easiest to organize No separation of ownership and control Owners run business Lower taxes than corporations DISADVANTAGES No specialization Unlimited liability Limited access to financial capital Limited life of firm

5 Partnership ADVANTAGES More specialization than sole proprietor Easier to raise financial capital than sole proprietor Lower taxes than corporation DISADVANTAGES Unlimited liability You share profits with partner Possible conflicts with partner Possible instability if partner quits or dies

6 Corporations Created by corporate charter Legally a “living thing” Owned by shareholders –Shareholders own stock –They can profit in two ways Dividends: divided profit of corporation Capital gains: profit by selling stock at higher price Managed by board of directors –Elected by shareholders

7 Corporation ADVANTAGES Limited liability –Owners not responsible for corporate debt Specialization Raising financial capital –Selling stock –Corporate bonds Professional management Unlimited life DISADVANTAGES Harder to start Complicated decision- making Less control for owners (shareholders) –Board of directors is elected by shareholders –Board runs corporation Double taxation –Corporate income taxes for corporation –Capital gains taxes on shareholders’ dividends

8

9 %#@&


Download ppt "Microeconomics Business Organizations. Microeconomics: Overview Study of individual businesses and households SMALL scale decisions –A firm’s business."

Similar presentations


Ads by Google