The Strengths And Weaknesses Of A Partnership

Etext link - https://economicsfccblog.files.wordpress.com/2016/09/economics-principles-and-practices1.pdf CHAPTER 3 21. Identify the strengths and weaknesses of a partnership * Advantages - easy to startup, bring different areas of expertise to the business, lack of special taxes on partnership, easy to attract financial capital. More efficient operations that come with larger size workforce * Disadvantages - each partner is fully responsible for the acts of all other partners, limited life, might break up because of conflict 25. Discuss the difference between a horizontal and a vertical merger. * In horizontal merger, two or more firms join forces which manufacture the same product while in the case of vertical merger, firms in different steps of marketing or manufacturing come together. 26. Explain why a corporation might choose to become a conglomerate. * A corporation might choose to become a conglomerate as this will protect its overall sales and profits from isolated economic happenings. 27. Discuss the difference between a nonprofit and other forms of business organizations. * The difference between non profit organizations and other forms of business organizations is that the non profit institutions do not seek financial gain. 28. Describe the purpose of a labor union. * The purpose of a labor union is to work for its members’ interests. 31. Do you think mergers are beneficial for the US economy? Defend your response. * Yes, as companies merge, it will be more profitable for shareholders. 33. What is the difference between the unlimited liability of proprietorships and partnerships, and the limited liability of corporations? Unlimited liability for proprietorships and partnerships implies that all partners have an equal responsibility in relation to the debts owned by the business. Equally, a sole proprietor has a personal responsibility to settle all the obligations and debts incurred in the cause of doing business. On the contrary, limited liability of corporations implies that the shareholders are only responsible for the debts incurred by the corporations up to their level of investment. CHAPTER 4 pg 133 (on etext) 18. The law of demand holds that when all other factors are held constant, an increase in price of a commodity leads to a decrease in the quantity demanded. On the other hand, a decrease in price leads to an increase in the quantity of goods demanded. 20. Income effect is an expression of how consumption of goods and services changes as a result if increased purchasing power. Substitution effect on the other hand measures how consumption is affected as a result of changes in prices and relative income. 21. 17145028575Change in individual demand IncomeSubstitutesFuture expectationsComplementsChanges in demographicsChange in individual demand IncomeSubstitutesFuture expectationsComplementsChanges in demographics An increase in income implies that people have more to spend leading to an increase in demand while the opposite is true. A positive increase in the price of substitutes leads to an increase in the quantity demanded while a reduction in price of substitutes leads to a decrease in the quantity demanded for a product. Increase in population leads to an increase of quantity demanded w...