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Flashcards and Answers – Chapter 8 Economics Study Guide

question

What percentage of all businesses in the US are Sole Proprietorships?
answer

75%
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Who is responsible for debt if a partnership fails? (3 different answers)
answer

General Partnership- Equal responsibility Limited Partnership- 1 person has limited liability Limited Liability Partnership- Everyone has liability
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What type of merger involves 2 or more businesses producing the same good?
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Horizontal merger
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What is the difference between a corporation compared to other businesses?
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Owners and workers are separate within a corporation
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Define Royalties
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The percentage of earnings paid for a franchise
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What is a fringe benefit?
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Benefits received other than wages or salary Example: paid vacation, health insurance, etc.
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Name the disadvantages of a Sole Proprietorship
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Unlimited liability, Limited access to resources, Lack of permanence
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What are assets?
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Money and other valuables in a business
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What is the percentage of US Corporations and the percentage of sales?
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20% of US are corporations, 90% of sales come from a corporation
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Dividend
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Portion of company profits paid to stockholders
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Zoning Law
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Regulations that separate areas for residency/businesses
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Stock
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Share of ownership in a corporation
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Liability
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Debt
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Business License
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A license needed to run a business
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Advantages of a Sole Proprietorship
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Easy start up Relatively few regulations Sole receiver of profits Full control Easy to discontinue
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Advantages of a Partnership
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Easy start up Shared decision making Larger pool of capital No taxation on business
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Advantages of a Franchise
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Management training and support Standardized quality National advertisement programs Financial assistance Centralized buying power