Economics Ch. 8 and 9 Definitions Quiz

Study Notes

Sole Proprietorship: An unincorporated business owned by one individual; profits are taxed as personal income. Example: Lemonade stand.
Partnership: A business association involving two or more people.
Types of Partnerships:
- General Partnership: Partners have unlimited liability; personal assets are at risk for business obligations.
- Limited Partnership: Requires at least one general partner and one limited partner; limited partners have restricted involvement in daily operations. Example: Investor collaborating with a managing partner.
- Limited Liability Partnership (LLP): Some or all partners have limited liability, protecting them from other partners' misconduct. Example: Partnership among doctors.

Corporation: A distinct legal entity separate from its owners; owned by shareholders. Corporations can enter contracts, borrow money, sue, and pay taxes. Example: Pepsico.

Vertical Merger: A merger of two companies at different stages of production, creating a final product. Example: Oculus partnering with Samsung for a VR headset.
Horizontal Merger: Occurs between companies in the same industry, aiming to consolidate resources. Example: ATT merging with DirectTV.
Conglomerate: A corporation composed of various unrelated businesses. Example: Alphabet Inc.

Multinational Corporation: Operates in multiple countries, utilizing international facilities and assets. Example: Apple, designed in the U.S., manufactured in China.

Franchise: A licensing agreement allowing one party to use another's business model and brand in exchange for fees. Example: McDonald's.
Cooperatives: Owned and operated for the benefit of members using its services.

Consumer Cooperative: Focused on retail for personal goods. Example: Buying an iPhone from Apple.
Service Cooperative: Provides services to members. Example: Paying someone to wash a car.
Producer Cooperative: Comprises individuals or businesses that produce goods. Example: A strawberry farm.

Nonprofit Organization: Provides public services and can earn profits, but not primarily for profit-making. No shareholders.

Professional Nonprofits: Organizations related to specific professions. Example: American Medical Association.
Business Nonprofits: Operate similarly to businesses but with a nonprofit mission.
Trade Associations: Funded by businesses operating in a specific industry for mutual benefit. Example: Agricultural Transportation Coalition.
Labor Unions: Organizations that protect workers' rights and interests. Example: United Steel Workers.