Question

PI continuation of the questions for shahab1

6. What are the three types of business firms in the U.S.? Explain each. (Short Answer)

7. Define & Explain APS (also use an equation):

8. In 2006, which of Question #6 Had the majority of sales within the U.S.?

A. Partnerships

B. Corporations

C. Proprietorships

D. All of the above

9. The Average Propensity to Consume equation can be:

A. Assets - Liabilities

B. Consumption divided by Disposable Income

C. Consumption + Disposable Income

D. Saving divided by Disposable Income

10. Give one (1) economic role of the Government (Short Answer):

Answer 1

6. The three types of business firms in US are as follows:

i) Sole Proprietorship - It is usually the most commonly found business firm and is run by a single owner. The profit and loss is owned by the owner itself. The day-to-day decisions regarding business operations are in the hands of the same owner. The owner has unlimited liability. The creditors may opt to sell owner's personal assets to recover loaned funds.

ii) Partnership - In this there are two or more individuals who are the co-owners and share the profit & loss in proportion as mutually agreed upon at the time of entering into partnership deed. It can be a limited

iii) Limited Liability Company - It is generally considered hybrid firm consisting corporation and partnership. The members has liability limited. It has any 2 but not more than 2 of the 4 characteristics - limited liability , perpetuity , centralized management and transfer of ownership.

7. APS stands for Average Propensity to Save. It is the measure that indicate Savings as proportion of disposable income.

8. In 2006, Proprietorship accounted for highest sales within US. It accounted for approx 73.2% of business share

9. With reference to answer for question 7, correct answer is D

APS is the Savings divided by Disposable Income

10. The economic role of government - maintain competition. With implementation of laws and regulations governing the market, the government prevents formation of conglomerates and cartel in areas of goods & services of mass consumption. With subsidy program, it tends to project infant industry from cut-throat competition within domestic territory of the country and also from foreign companies.