3.3 Big Business

Organization owned by many people but treated by law if it were a single person

• Partnership
• Sole Proprietorship
• Corporation
• Non-profit Organization

Who own's corporations?

• Government
• Stockholders

• Employees
• Customers

How do corporations raise money?

• By selling stocks

• By winning a lottery
• By borrowing from a bank
• By asking for donations

What did corporations do with the money raised from selling stocks?

• Invested in technology, hired workers, purchase equipment

• Bought luxury cars for executives
• Donated to charity
• Paid dividends to shareholders

Costs company pays even if not operating

• Variable costs
• Direct costs
• Indirect costs
• Fixed costs

Costs incurred running a company

• Operating Costs

• Price of company's stock
• Company's market capitalization
• Company's dividend yield

Which is Not an operating cost?

• Shipping Cost

• Buying Raw materials

• Salaries
• Initial investment cost

Which is not a Fixed Cost of a business?

• Loans

• Taxes

• Mortgages

• Shipping

Illegal agreements among competitors to keep prices at higher levels

• Pools

• Price reduction
• Price discrimination
• Price skimming

What is vertical integration in business?

• A strategy where a company owns all of the businesses that it depends on for operation.

• A strategy where a company expands its business operations into different geographical locations
• A strategy where a company reduces its business operations to focus on one specific area
• A strategy where a company merges with or acquires another company in the same industry