Unit 1 Test Material Flashcards
What are the 5 types of businesses?
Sole Proprietorship, Partnership, Corporation, Co-operative, Franchise
What is a sole proprietorship? What are some advantages and disadvantages?
It is when a there is a single owner of a business.
Advantages:
- single owner gets all profits
- starting your own business is the easiest and least expensive way
Disadvantages:
- single owner is exposed to all the risks
- they are responsible for all debts
- personal savings at risk
What is a partnership? What are some advantages and disadvantages?
It is when 2 or more people partner up to own a business.
Advantages:
- in a limited partnership they have limited liability so they only have to pay back what they invested
- develop a working relationship between partners
easy to set up and run
Disadvantages:
- in a general partnership, all partners have unlimited liability- each partner could be held resposible for other partners debts
- if partners dont get along or disagree
-profits are split up
What is a corporation? What are some advantages and disadvantages?
It is when there are many owners who can buy shares if a business.
Advantages:
- limited liability- if it fails, you only lose what they invested
- profits are given to owners through dividends
- relatively safe form of ownership- depending on how many shares you own
Disadvantages:
- return investment is relatively low because its safe
- control of company depends on how many shares owned- if 51% or more you can make all the decisions
What is a co-operative? What are the advantages and disadvantages?
a business that is owned by either the employees or the customers.
Advantages:
- primary goal is service, ethics and culture- not for profit
- less expensive goods/services
- more easily set up than a corporation
Disadvantages
- decision making can be difficult- there is a board where everyone must be heard and discussions could go on forever.
- no possibilities for huge profits for owners
What is a franchise? What are some advantages and disadvantages?
It is company that charges franchisees a charge to open and run their store.
Advantages:
- brand recognition is already established
- shared marketing expenses
- corporate training and support
- limited liability
Disadvantages:
- franchising fee can be high
- required to buy supplies from the franchiser
- required to follow the franchisers rules
What is an obsolete product? How does a product become obsolete in one market but not in another?
they are products that people no longer want or improved goods have replaced them.
Products can become obsolete in one market but not in another because in one market it could be needed or it could be more popular than in other markets.
What is staying power? What gives a product staying power?
It refers to the power of a product to remain in the market. Products usually have staying power if they have become a necessity or people would have a hard time living without. Ex. phones, cars
What is supply?
it is the total amount of products the manufacturer is willing to supply to the market at any given time.
What is demand?
is the total amount that the consumers want of a product at a certain price
What is a market equilibrium?
the point where the supply and demand cross on the supply an ddemand curve. It represents the point where the supply and demand have reached a point of stability
What happens when there is a product surplus?
- there is excess supply
- the price is pushed down
What happens when there is a product shortage?
- there is excess demand
- price is pushed up
What is an exchange rate?
An exchange rate between two countries specifies how much one currency is worth in terms of another.
When is a currency strong?
When less than one unit of a currency can buy you one unit of another currency. This is because less of it can buy you more of another. Less can buy you more of another.
