071707 - Advantages: Limited liability Disadvantages:...

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Sheet1 Page 1 Chapter 8 Any combination of two items along the indifference curve gives equal satisfaction. Moving among indifference curves, one gets more utility/satisfaction as one moves up-right. Budget line shows the affordable combinations of two items for a person. The BL changes with income or prices. Consumer equilibrium is the intersection between the budget line and the outermost indifference curve possible. The BL/IC can be extrapolated to give a demand curve. Proprietorship One owner Most businesses in the US are organized as such. Advantages: Profits are taxed only once Disadvantages: Owner has unlimited liability Partnership Two or more owners Advantages: Profits are taxed only once Disadvantages: Unlimited liability (generally), each partner has potential liability for all debt of partnership. There is a subset c a Corporation Owners are the shareholders of the company
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Unformatted text preview: Advantages: Limited liability Disadvantages: Corporate profits are taxed twice. Corps can borrow from a bank, borrow by issuing bonds (this would make a person a lender), issuing stock (this would make a Capital gains are one way of making money off of shares of stock. Market Capitalization (Market Cap): Simply all available shares of stock in a company multiplied by the price. EPS: Earnings (profit) per share. DIV: Dividend - Amount over the next year that a company will pay to a stock owner for each share they own. These are usua l Chief Executives run the day-to-day, these would be top-level management. The Board of Directors of a company are elected by shareholders, and advise the CEOs. Obligated to represent shareholders . The shareholders are the owners. BoDs also decide divdend payouts Sheet1 Page 2 partners...
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071707 - Advantages: Limited liability Disadvantages:...

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