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Review

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?. Business Firms. People are free to risk their time and their savings to start a business

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Review

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

  8. 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

  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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