ECON 101 2Midtermreview

In this case average total cost increases at low

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Unformatted text preview: single owner who has unlimited liability, or legal responsibility for all debts incurred by the firm—up to an amount equal to the entire wealth of the owner. The proprietor also makes management decisions and receives the firm’s profit. Profits are taxed the same as the owner’s other income. Partnership A partnership is a firm with two or more owners who have unlimited liability. Partners must agree on a management structure and how to divide up the profits. Profits from partnerships are taxed as the personal income of the owners. Corporation A corporation is owned by one or more stockholders with limited liability, which means the owners who have legal liability only for the initial value of their investment. The personal wealth of the stockholders is not at risk...
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