Question

Identify and describe the various types of business ownership. Provide examples of each. Explain the advantages and disadvantages of each.

A) Sole Proprietorship
B) Partnership
C) Corporation
D) Cooperative

What three institutions influence economics the most? Explain how each influences economics and provide examples of each.
A) Government
B) Financial Institutions
C) Consumers
D) International Organizations

If you were a sole proprietor and had annual profits of $100,000, how would the profits be distributed?
A) It would all go to the owner.
B) It would be subject to taxation.
C) It would be reinvested in the business.
D) N/A

You are partners with Alice and Mark. You contributed 50% of the capital, Alice contributed 30%, and Mark contributed 20%.
(a) How would the annual profits of $100,000 be distributed among all three of you?
A) You would get $50,000, Alice $30,000, and Mark $20,000.
B) You would get $60,000, Alice $30,000, and Mark $10,000.
C) You would get $40,000, Alice $30,000, and Mark $30,000.
D) N/A
(b) Using these same numbers, how would an annual loss of $80,000 be distributed between the three of you?
A) You would lose $40,000, Alice $24,000, and Mark $16,000.
B) You would lose $48,000, Alice $24,000, and Mark $8,000.
C) You would lose $32,000, Alice $24,000, and Mark $24,000.
D) N/A

Conduct internet research to discover the three biggest threats to each type of business institution today. Report your findings in short essay form.
A) N/A
B) N/A
C) N/A
D) N/A

Answer 1

The main types of business ownership are sole proprietorship, partnership, corporation, and cooperative, each with distinct advantages and disadvantages regarding management control, liability, tax implications, and capital acquisition. Sole proprietors keep profits post-taxation but face unlimited liability, while partners share profits and losses based on their capital contributions. Corporations offer owner liability protection but double taxation on profits, and cooperatives prioritize mutual benefits but may have lower capital and internal disagreements.

Step-by-step explanation:

Types of Business Ownership

The various types of business ownership include: sole proprietorship, partnership, corporation, and cooperative.

• Sole Proprietorship: This is a business owned and run by one individual. It's easy to start and manage, offers full control to the owner who also retains all profits after taxes. However, the owner assumes all risks and liabilities, making it the least protected form of business ownership in terms of personal liability.
• Partnership: In this model, two or more people share the ownership. Examples include law firms and medical practices. General partnerships share both profits and liabilities equally, while limited partnerships allow for liability to be limited to the amount invested in the business.
• Corporation: A corporation is a legal entity separate from its owners, offering the greatest protection from personal liability. Corporations can raise capital more easily through stock offerings. However, they are more complicated and expensive to establish and are subject to more regulations and double taxation on profits.
• Cooperative: Owned and run by a group of individuals for their mutual benefit, cooperatives are operated and managed democratically. Profits are distributed among members, and while they offer lower capital accumulation and potential for conflict among member goals, they promote equitable use of resources.

If you were a sole proprietor with annual profits of $100,000, the profits would primarily be subject to taxation (B), and after taxes, they would go to you, the owner (A), and possibly be reinvested in the business for growth (C).

Regarding the distribution of profits in a partnership, if the agreement specifies that profits are shared according to the percentage of capital contributed, your share of $100,000 would be $50,000, Alice's $30,000, and Mark's $20,000 (A). In case of an annual loss of $80,000, it would also likely be distributed according to capital contributions: you would lose $40,000, Alice $24,000, and Mark $16,000 (A).