Economics of Marketing (part II)

Question 1

Define sole-proprietorship and give an example

Answer 1

One owner
Ex. Mark Cuban owns Dallas Mavericks

Question 2

Define partnership and give an example

Answer 2

Two or more owners
Ex. Toronto Maple Leafs and Raptors are owned by Rogers and Bell

Question 3

Explain what a limited partnership is

Answer 3

A partnership may have a silent partner
Silent or limited partners have limited liability
There must be least ONE unlimited partner

Question 4

Define corporations and give an example

Answer 4

The owners of a corporation are called stockholders or shareholders (purchased stock)
Stockholders elect the board of directors who hire people to run the company
Ex. Blue Jays are owned by Rogers

Question 5

List 2 advantages and 2 disadvantages of corporations

Answer 5

Advantages:
1. Ability to hire experts to run the company
2. Ability to expand

Disadvantages:
1. Complex structure
2. Higher tax rate

Question 6

List 2 advantages and 2 disadvantages of partnership

Answer 6

Advantages:
1. Shared financial investment
2. Shared responsibilities

Disadvantages:
1. Difficulty in withdrawing
2. Disagreements among partners

Question 7

List 2 advantages and 2 disadvantages of sole-proprietorship

Answer 7

Advantages:
1. Complete control over the business
2. All profits belong to the owner

Disadvantages:
1. Lack of finances to expand
2. Time the owner must devote to running the business