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BUSINESS FIRMS: Directions

BUSINESS FIRMS: Directions. Read the following PowerPoint and answer all the following questions and do all the following activities, readings etc. Review. What are the 4 shortcomings of GDP? What is the difference between real GDP and nominal GDP? What does per capita GDP measure?

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BUSINESS FIRMS: Directions

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  1. BUSINESS FIRMS: Directions • Read the following PowerPoint and answer all the following questions and do all the following activities, readings etc.

  2. 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 2006?

  3. ANNOUNCEMENTS: • Unit 5 Test Next Monday • 100 points • Unit 5 Packet Due on Test Day so bring all your materials

  4. 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

  5. 3 Types of Business Firms • Sole Proprietorship • Partnership • Corporations

  6. 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

  7. 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

  8. 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

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

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

  11. Advantages and Disadvantages • Each of the 3 types of business firms has advantages and disadvantages • Read pp. 233-246 in the book to find them out!

  12. Find out the following: • Advantages of Sole Proprietorship • Disadvantages of Sole Proprietorship • Advantages of Partnerships • Disadvantages of Partnerships • Advantages of Corporations • Disadvantages of Corporations

  13. After You Are Done Reading… • Complete the chart on the back of this page • Name: __________________ • Period: _____________ • ASSIGNMENT # _______________

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