1. What are the three types of business organizations?
Sole Proprietorship
Partnership
Corporation

2. Sole Proprietorship Strengths Weaknesses Easy to start
Owner keeps all profits
Easy to get out of
Profits only taxed once
Weaknesses
Unlimited liability
Can be hard to raise capital
Owner may lack needed skills (especially managerial)

3. Partnership Strengths Weaknesses
Both partners can bring a different set of skills to the business (two heads are better than one)
Easier to raise capital
Share some liability
Weaknesses
Partners are responsible for each other
Potential conflict between partners
Business could end if one partner leaves

4. Corporation Strengths Weaknesses
Easy to raise capital (just sell more shares)
Professionals are hired to run the business
Owners have limited liability
Weaknesses
Can be expensive to start
Owners are not directly involved in running the business
Profits are taxed twice

5. Market Structures
How does the level of competition affect price and production among businesses?

6. Warmup What are the benefits of competition in our system?
Better Prices
Better Quality
Invention
Innovation

7. Perfect (pure) competition
Many sellers
Selling Identical Products
“Price Takers” – can’t influence price
Easy to enter
No non price competition

8. Monopolistic Competition
Many sellers
Selling similar but different products
Some control over price
Fairly easy to enter
A lot of non price competition

9. Oligopoly Few Sellers Selling Similar or Different products
A lot of control over price (collusion)
Difficult to enter

10. Monopoly One business Selling unique products
A lot of control over price – “Price Makers”
Difficult to enter

11. Legal Monopolies
Natural – exist for efficiency purposes (Marta, Georgia Power)
Geographic – due to location (general store in small town)
Technological – ability to make something no one else can make (pharmaceutical drug)
Government – market run by the Government (United States Post Office)

12. Competition Market Game
How does the amount of competition in a market affect the prices and revenues of the firms in that market?