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Chapter 7: Problem 1

Define a. sole proprietorship b. asset c. corporation d. partnership

Short Answer

Expert verified
a. A sole proprietorship is a business owned and run by one person. b. An asset is a valuable property owned by a person or company. c. A corporation is a separate legal entity with most of the rights and responsibilities of individuals, but with limited liability. d. A partnership is an arrangement where two or more parties manage a business and share its profits.

Step by step solution

01

Step 1. Define Sole Proprietorship

A sole proprietorship is a type of business entity that is owned and run by a single person, and there is no legal distinction between the owner and the business. The owner receives all profits and has unlimited responsibility for all losses and debts.
02

Step 2. Define Asset

An asset refers to an item of property owned by a person or company, regarded as having value and can be used to meet debts, commitments, or legacies. It can be tangible or intangible.
03

Step 3. Define Corporation

A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that individuals possess; they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. The most significant difference between a corporation and an individual is that a corporation has limited liability.
04

Step 4. Define Partnership

A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits. There are several types of partnership arrangements which depend on the nature of the agreement and liability of the partners.

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Most popular questions from this chapter

An airline has 100 seats to sell on a plane traveling from New York to Los Angeles. It sells its tickets for \(\$ 450\) each. At this price, 97 tickets are sold. Just as the plane is about to take off, a person without a ticket says he is willing to pay 150 dollar, but not one penny more, to buy a ticket on the plane. The additional cost of the additional passenger (to the airline)- that is, the marginal cost to the airline-is 100 dollar.Is it in the best interest of the airline to sell the person a ticket for 150 dollar? Explain your answer.

A firm produces 125 units of a good. Its variable costs are 400 dollar, and its total costs are 700 dollar Answer the following questions: a. What do the firm's fixed costs equal? b. What is the average total cost equal to? c. If variable costs were 385 dollar when 124 units were produced, then what was the total cost equal to at 124 units?

This section explained how a firm computes profit. Specifically, it computes total cost and total revenue and then finds the difference. Suppose a firm wants to compute its profit per unit. In other words, instead of computing how much profit it earns in total, it wants to know how much profit it earns per unit. How could the firm go about computing profit per unit? (Hint: The answer deals with average total cost.)

The owners of which types of business organizations face unlimited liability?

Give an example of a fixed cost and a variable \(\operatorname{cost}\)
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