Why is that because people value leisure and what you

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: dy” will shirk if he or she gets a chance, but it is likely that most people will shirk under the right circumstances. Why is that? Because people value leisure, and what you are doing when you shirk is essentially consuming some leisure. Also, once some people shirk, others naturally begin to feel that they should shirk too, or they end up doing more than their share and getting paid for less of their share. Ask yourself whether you are more likely to shirk in some settings than others. What you will find is that you are more likely to shirk when the costs of shirking (to you) are low and that you are less likely to shirk when the costs of shirking (to you) are high. shirking The behavior of a worker who is putting forth less than the agreed-to effort. Section 1 About Business Firms 159 07 (154-185) EMC Chap 07 sole proprietorship A business that is owned by one individual who makes all business decisions, receives all the profits or incurs all the losses of the firm, and is legally responsible for the debts of the firm. Many small retail businesses, like this bicycle shop, are sole proprietorships. What are the advantages and disadvantages of a sole proprietorship, as compared to other types of business ownership? 11/17/05 5:13 PM Page 160 For example, in the classroom environment, some students say they end up doing less work and taking things a little easier in class when a substitute teacher is in the class. Why is this? Often the students think that the substitute teacher is here today and gone tomorrow, so they can pretty much do what they want today and get away with it. In anticipation of this behavior, the regular teacher will ask the substitute teacher to give a (graded) quiz to the students. This quiz is supposed to get the students to take the substitute teacher more seriously. Three Types of Firms Business firms commonly fall into one of three legal categories: sole proprietorships, partnerships, and corporations. Let’s look at the similarities and differences of these three types of ownership. Sole Proprietorships A sole proprietorship is a business that is owned by one individual, who makes all the business decisions, receives all the prof- 160 Chapter 7 Business Operations its or takes all the losses of the firm, and is legally responsible for the debts of the firm. Many family farms are sole proprietorships, as are many other businesses such as barbershops, restaurants, and carpet-cleaning services. About 18.3 million proprietorships operate in the United States. Advantages of Sole Proprietorships Certain advantages come with organizing a business as a sole proprietorship. 1. Sole proprietorships are easy to form and to dissolve. To start a sole proprietorship, you need only meet certain broadly defined governmental regulations. Some firms must meet health and zoning regulations; for example, if you are starting a restaurant, you must be sure that the restaurant is clean (a health regulation) and that it is located in an area where restaurants are permitted...
View Full Document

Ask a homework question - tutors are online