The text addresses the question of why a particular business organization form dominates in terms of total profits. It also discusses the advantages and characteristics of sole proprietorships, partnerships, and corporations. Sole proprietorships are common due to their low start-up costs and freedom for decision-making by the proprietor. Corporations have advantages such as the ability to raise large amounts of money through stocks and bonds, limited liability that attracts potential owners, and economies of scale resulting from their size and wider ownership base.
Another topic discussed is public goods, which have two characteristics: they are non-excludable (allowing multiple people to consume without preventing others) and non-rivalrous (once produced, everyone can enjoy the benefits). Private firms may be less motivated to produce public goods if individuals can freely use the
...m without compensation. The text also mentions the free-rider problem associated with public goods.
Additionally, it poses questions about whether U.S. Border patrol is a public or private good and explores the reasoning behind it. Similarly, satellite TV is mentioned as another example that requires explanation regarding its classification as a public or private good.
The text highlights that if goods are deemed incalculable, private companies are unlikely to produce them due to lack of profitability. The issue arises when individuals benefit from public goods without contributing to their cost through taxes. As an example, the U.S. Border Patrol is considered a public good as its use does not restrict others from utilizing it. In contrast, Satellite TV is classified as a private good since it can only be used by the person who has installed it at their residence and cannot be shared with neighbors.
production possibilities curve can be employed to visually demonstrate this concept, with public goods represented on the vertical axis and private goods depicted on the horizontal axis.
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