1. Business Organization - number of owners - Market Structure - number of sellers -

2. What is this standard about?
Business Organization
How does a entrepreneur, when setting up a business, decide how to best organize it?
Market Structures
There are different types of markets for different products. Does a producer choose the type of market, or is it chosen by the G&S produced?

3. Business Organization
3 questions for entrepreneurs…
Should you operate a business on your own?
Would having a partner be better?
What does it mean to incorporate a business?

4. KEY IDEAS Sole Proprietorship Partnership Corporation risk vs. profit
decision-making
capital investment liability
flexibility
# of owners, profits, capital

5. Examples of Business Organization:
Sole Proprietorship
Most small businesses, franchises, Rigby’s, Wilson’s Bakery
Make up majority of businesses in the U.S., generates least total profit
Partnership
Law offices; Medical practices; Google & Twitter both started as partnerships
Corporation
Coca Cola, Pepsi Cola, Ford, Microsoft
Makes up minority of businesses, generate most total profit

6. Business Organization
established to… 1
Engage in commercial enterprise
consisting of… 2
Sole Proprietorship
>Owned/operated by a single person >75% of US businesses >6% of sales
Partnership
>Owned by 2+ people
>Responsibility, profit divided 3 4
Corporation
>Legal entity owned by stockholders >20% of US businesses >Produces most of US G&S
Advantages 5
Easy to start Few regulations Full Control 7 9
Easy to start Specialization Greater access to FoP
Limited Liability
Double taxation
Permanence Easy to obtain FoP
Disadvantages 6
Unlimited liability Limited access to FoP 8
Less personal Less Control Potential for Conflict 10
Difficult to start

7. Monopolistic Competition
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
KEY IDEAS
>Barriers to entry
>Product differentiation
>Price-setting power: price makers or price takers?
Number of sellers, products
Control over price & barriers to entry

8. Other Examples of Market Structures:
Perfect Competition
Farmers, fishermen (&women), Restaurants (fast food, steak, seafood, Italian),
Monopolistic Competition
Gas Stations, clothing
Oligopolies
Cellphone service providers, Big 3 American automakers, computer operating system providers (Apple, Microsoft), all auto makers
Monopolies
Pharmaceutical companies, Railroads & Steel companies in the late 1800s, early 1900s; nationalized industries (socialism, communism); professional sports teams, vendors at a concert or sporting event, utilities

9. Barriers to Entry; Control over Price
which is… 1
Type of market based on:
The G/S
How many firms in the mkt
MARKET STRUCTURE
comprised of… 2 4
Perfect Competition
Monopolistic Competition 3
Oligopoly 5
Monopoly
characterized by…
-Many buyers & sellers
(price takers)
-Identical G&S
-No barriers to entry/exit
-No surpluses/shortages
-Many firms
-Similar but not identical G&S
-Few barriers to entry/exit
-Non-price competition
-Differentiated G&S 8
-3-4 large firms dominate the market
-High barriers to entry
-Price Wars 9
-One seller
(price maker)
-Significant barriers to entry/exit
-Can practice price discrimination 6 7
Barriers to Entry; Control over Price
Number of Sellers, Products in the market