Financing and Supporting Business Organizations
The three main business organizations are proprietorships, partnerships, and corporations. The basic role of labor is to produce goods and provide services under the pay of businesses. In order for a business to start, start-up costs must be paid, a business can obtain a loan form the bank to pay those costs. Businesses can invest in future growth by obtaining a loan, which can help improve the business by hiring more workers or buying machines or physical capital that can help increase productivity. Businesses can also invest in future growth by saving some of their profit in the bank.
The first type of business organization is the sole proprietorship, which is where one individual runs the business, makes all of the decisions, and keeps all of the profit earned. The disadvantage of a sole proprietorship is their limited access to resources, unlimited liability, and the fact that they do not last very long. A partnership is where two or more individuals run the business, make the decisions, and share the profit which is usually more than that of a sole proprietorship, the disadvantage of being in a partnership would be personal conflict between the partners. A corporation is a large business that is owned by many individual stockholders, it has limited liability and can make more of a profit than both sole proprietorships and partnerships. The disadvantage of corporations is that they are difficult to start-up, and face the most regulation and legal requirements.
The role of labor in the market is to help firms and government agencies produce goods and services through the labor force which receives wages in exchange. Trend ...