Partnerships

A partnership is a business owned by two or more people. Its advantages and disadvantages are very similar to the sole-proprietorship.  Two forms of partnership exist. In the most common form, the general partnership, all partners are responsible for financial obligations and management of the business. In a limited partnership, while having contributed to funds to finance the business, at least one partner is not active in the daily running of the business.

Some advantages of a partnership include:

• ease of start-up
• no special taxes on a partnership
• easier to raise capital through bank loans or new partner

Some disadvantages of a partnership include:

• partners are responsible for the acts of each other, except in a limited partnership where the limits are spelled out
• limited life (partnerships ends if a partner leaves)
• potential for partner conflicts

Objectives:

• Describe the characteristics of a partnership
• Explain some of the advantages and disadvantages of a partnership

Here is a link to a resource that explains how to avoid partnership problems.

Homework: Read ch. 3-3 and don’t forget the initiative essay is due Monday the 26th.

Business Organization

If you’ve ever sold lemonade or provided yard care for money, you’ve been an entrepreneur.  If you had a partner, how was the money and work divided?

There are three major forms of business organization:

• sole-proprietorship
• partnership
• corporation

Each form of business organization has its advantages and disadvantages. In today’s class, we examined the sole-proprietorship.

Objectives:

• Describe the characteristics of the sole-proprietorship
• Undestand the advantages and disadvantages of sole-proprietorships

Sole-proprietorships are businesses run by one person. While the smallest type of business organization in size, they are the most numerous. Advantages of the sole-proprietorship include:

• easy to start
• owner controls all profit
• owner is main decision maker
• taxes apply to personal income tax (no business tax)

Disadvantages include:

• unlimited liablity
• business has limited life
• more difficult to raise financial capital
• more difficult to attract highly qualified personnel

Here’s a quick overview regarding sole-proprietorships. An overview of legal liability for sole-proprietorships.

Homework: Choose one initiative from yesterday’s exercise. Decide either to support or oppose it. Construct a four (or more) paragraph essay defending your position. (Due Monday the 26th)

Trade-offs, Social vs. Economic Goals

In a country as diverse as the United States, people share many broad economic and social goals. The following is a short list of examples:

• Economic Freedom
• Economic Equity
• Economic Security
• Price Stability
• Healthy Living Conditions

While these goals are important, they can often conflict with one another.

Objectives:

• Evaluate the trade-offs among economic and social goals
• Fashion a compromise between social and economic goals.

Today we looked at how goals such as economic equity and full employment might conflict (i.e. minimum wage). To accomplish this task, the class separated into three groups representing: Shareholders/owners, labor/workers, community members. Each of these groups was presented with a list of legislative measures and asked to analyze it’s impact upon their interests. After measuring the potential impact the group either endorsed, modified, or rejected the initiative. The class discussed the group viewpoints but did not reach any final decisions (illustrating the difficulty of compromise and strength of self-interest).

Special Note:

The class received a special visit from Mrs. McCrory (TCP Assistant Director).  The purpose was to provide FAFSA forms and information regarding financial aid for college. The deadlines are rapidly approaching (CA Initial Awards - March 2, 2009). Far too few students realize that there is a large amount of economic  help available for college, if they complete the necessary forms in a timely fashion.

Homework: None tonight.

Testing & the Inauguration

Economics class today provided an unusual combination and special opportunity today. The class demonstrated it’s master of chapter 2 objectives (economic systems and decision making).

Following our quiz and reviewing the results, our attention turned to the inauguration of the 44th President of the United States, Barack Obama. As is often the case, technical difficulties proved challenging and limited our viewing time, and yet we were able to watch a good portion of the events. See President Obama’s Inauguration (swearing in and speech) part 1, part 2, and  part 3 .

It will be interesting to see how the economy will react and the final version of the economic stimulus plan. Here is the official White House posting of the Obama Economic Agenda.

Homework: Read chapter 3, sections 1 & 2.

Economics Posts

Beginning tomorrow (January 20th, 2009), I will be posting updates regarding class topics, objectives, and homework. In addition, links to items and resources of interest will be provided as well. I hope this is of use to you and look forward to your feedback.

–djohnson

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