Business Basics: Profit and Entrepreneurship

Study Notes

Business and Profit

A business is a person, partnership, or corporation engaged in commerce, manufacturing, or a service, aiming to make a profit.
Profit is the income left after all costs and expenses are paid, calculated by Revenue – Expenses = Profit.

Entrepreneurs and Competition

Entrepreneurs are people who start their own business, often driven by competition to offer better goods or services.
Competition leads to innovation, new inventions, and makes older products obsolete.

Needs and Wants

A need is something necessary for survival, such as food and shelter.
A want is something that is not necessary for survival but adds pleasure or comfort to life.

Economic Resources

Economic resources, also known as factors of production, are the means through which goods and services are available to consumers.
There are four types of economic resources: natural, human, entrepreneurial, and capital.
Natural resources are materials that come from the earth, water, and air.
Human resources (also known as labor) are the people who create goods and services.
Capital resources are resources that last for a long period of time and are created by people.

Economic Systems

Our society and economy are interdependent, relying on other businesses and economies for survival.
Every country has its own economic system, which must answer three questions:
- What goods and services should be produced within the system?
- For whom should these goods and services be produced?
- How should these goods and services be produced?

Forms of Business Ownership

Sole proprietorships are businesses owned by one person, with the key advantage of keeping all profits, but the key disadvantage of unlimited liability.
Partnerships are businesses operated by two or more partners, with terms written in a partnership agreement.
There are two types of partnerships: limited partnerships (limited liability) and general partnerships (unlimited liability).
Corporations are businesses with distinct legal status, generally large, and owned by hundreds or thousands of shareholders.
Corporations can be divided into four types: private, public, crown, and municipal.
Co-operatives are businesses owned by members or workers, prioritizing their needs.

Types of Corporations

A private corporation is owned by a few people, with shares not traded in the stock market.
A public corporation is a corporation with shares traded in the stock market.
A crown corporation is a corporation partially controlled by the government.
A municipal corporation is a corporation owned by a town or city.

Description

Explore the fundamentals of business, including the concept of profit and the role of entrepreneurs in the market. Learn about how profit is calculated and its importance in a business. Understand the motivation behind individuals starting their own enterprises.