ECON 208 Chapter Notes -Technological Change, Production Function

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ECON 208 Full Course Notes

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Financial capital: the profit a firm raises for carrying on its business. Equity: funds provided by the owners of the firm. Debt: funds borrowed from creditors outside the firm. Dividends: profits paid out to shareholders of a corporation (sometimes called distributive profits) The desire to maximize profits motivates all decisions. Need for firms to be socially responsible: every firm has a responsibility to society. Firms use four types of inputs for production: Intermediate products: goods that firms produce not for consumption by individuals but for purchase by other firms to help with production of other goods. Inputs provided by people: including labour services, investments, human capital. Inputs provided by the services of physical capital: by machines. The production function relates inputs to outputs: describes the technological relationship between the inputs that a firm uses and the output that it produces, function notation: q = f(l, k, production is a flow.

Related Questions

Match Column A with Column B

1) Partnership	a) a business owned by one person who is personally liable for all losses
2) Proprietorship	b) An artificial being created by a state
3) Limited partnership	c) two or more persons combine their efforts for a single transaction
4) Corporation	d) created when shareholders elect to be treates as partners for tax purposes
5) legal capacity	e) created by an agreement between two or more persons who agree to share profits and losses
6) buy-and-sell agreement	f) provides for compensation to a deceased or withdrawing owner of a business in return for that owners interest.
7) Subchapter S corporation	g) the ability of an organization to sue or to own property
8) joint venture	h) exists when some partners are treated like shareholders for liability purposes
9) limited liability company	i) tax doctine that allows income to be taxed at the owner level, not the organization level
10) "pass through"	j) owners recieve limited liability and tax treatment as if they were a partnership without filing as a corporation.

30) 30) What is a disadvantage of a corporation relative to a sole proprietorship or partnership? A) Profits are taxed twice: as corporate profits and as dividend income and capital gains to stockholders. B) perpetual life C) dies with the owner D) Owners have unlimited liability. E) high cost of capital

Indicate whether the following statement best describes a corporation, a sole proprietorship, or a partnership.

a. Liability is limited to the amount invested.

b. Unlimited personal liability.

c. Unlimited liability for oneself and one's partner's actions.

d. Ability to share work and risks of ownership without issuing shares.

e. Direct control by the owner.

f. Most difficult to organize.

g. Greater ability to secure funds from outside investors.

h. Accounts for largest sales receipts in the United States.

i. The most common form of business.

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ECON 208 Chapter Notes -Technological Change, Production Function

ECON 208 Full Course Notes

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