Definitions

Question 1

Divorce of ownership and control

Answer 1

Owners and those who control the firm (managers) are different groups with different objectives. The owners will wish to pursue a profit maximising objective; managers will more maybe have their own agenda.

Question 2

Incorporated

Answer 2

Private/Public limited companies - Legally declaring the business as a separate entity to the owners. Owners have limited liability.

Question 3

Limited Liability

Answer 3

Investors financial commitment is limited to the total amount invested into the business.

Question 4

Unlimited Liability

Answer 4

A business where owners share joint and responsibilities for the entire amount of debt and other liabilities amassed by the business.

Question 5

Nationalised Industry

Answer 5

Nationally owned for its importance. Royal mail used to be.

Question 6

Not for Profit

Answer 6

A business with motives other than profit. Social benefit to society or support a cause.

Question 7

Partnership

Answer 7

Two or more people join to form a business which is unincorporated. Partners have unlimited liability.

Question 8

Public Corporation

Answer 8

An organisation to perform a governmental function , like a hospital.

Question 9

Shareholders

Answer 9

Investors who are part owners of a business, liability limted to the amount invested.

Question 10

Sole Traders

Answer 10

An individual who runs/owns their own business. Unincorporated.

Question 11

Monopoly

Answer 11

When 25% or more of the market is owned by one company.