Chap 4 Class Notes - Chapter 4 Class Notes 1. Domestic...

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Chapter 4 Class Notes 1. Domestic Output a. Sole Proprietorship i. 72% of These ii. 5% of Sales b. Partnership i. c. Corporation i. 8% of these ii. 80+% of sales iii. Treated as one legal body 2. Advantages of corporations a. Methods of finance i. b. Limited Liability c. Hiring of specialists d. Unlimited lifetime i. Owners will change but it will not die 3. Disadvantages of corporations a. Red Table b. Expense c. Avoidance of responsibilities d. Questionable business activities
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Chapter 4 Class Notes e. Double taxation f. Inconsistent g. i. Principal-Agent Problem 1. Managers can have a different objective then the owners do a. Owner objective i. Stocks go higher b. Managers i. Sustained the life of the company 4. Public Sector a. Federal 5. Govt Role a. Provide legal structure i. Set laws we live by b. Maintain competition i. Monopoly and antitrust laws c. Redistribute income i. Welfare programs ii. Medicare d. Reallocating resources i. Market failure ii. Externalities
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Chap 4 Class Notes - Chapter 4 Class Notes 1. Domestic...

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