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Microeconomics

Microeconomics. the study of individuals and individual businesses Reference 6.1. business firm. a team when people working together can produce more than a person working alone efforts are pooled; rewards are shared. What if someone doesn’t do their fair share?.

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Microeconomics

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  1. Microeconomics the study of individuals and individual businesses Reference 6.1

  2. business firm • a team • when people working together can produce more than a person working alone • efforts are pooled; rewards are shared

  3. What if someone doesn’t do their fair share? • They don’t provide effort equal to others; they get an equal share of the rewards. • shirking

  4. How do you prevent shirking? • You need a MONITOR • a “boss” who makes sure everyone does their share.

  5. How do you make sure the “boss” does his job? • You make his/her benefits greater than the costs…. • you make him/her a residual claimant • someone entitled to a share of the profits • more profit = more benefit to the boss

  6. Complete the chart as follows: • Group #1- Complete Row #1 for Sole Proprietorships • Group #2 – Complete Row #2 for Partnerships • Group #3 – Complete Row #3 for Corporations

  7. Form groups of 3 • Each group must have a #1 member, #2 member and a #3 member. • Share information to complete your charts. • When you have finished, complete the chart to include information on franchises and cooperatives.

  8. Provide definition, example and illustration for 8 vocabulary terms business firm shirking bonds residual claimant limited liability unlimited liability assets dividends List eight businesses whose goods or services you or your family have purchased this month. What types of business firm are each of them? Homework

  9. Steps to forming a Corporation • Promoters write up a prospectus and seek investors. • Articles of Incorporation must be submitted to the state for approval and registration. The state issues a charter. • An organizational meeting is help to select a Board of Directors and create the bylaws.

  10. Corporations • Corporate Structure • Steps to forming a Corporation • Promoters write up a prospectus and seek investors. • Articles of Incorporation must be submitted to the state for approval and registration. The state issues a charter. • An organizational meeting is help to select a Board of Directors and create the bylaws.

  11. Sole Proprietorships 75% of businesses 6% total revenue Corporations 10-15 of businesses 89% total revenue Role in U.S. Economy

  12. How do corporations raise money to finance the building or expansion of their business? • They issue bonds • a loan • “issue debt” • They sell stocks • A share of ownership • Share of the profits = dividend

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