Start this week’s warm-ups on a new page. Pass up last week’s warm-ups (4/29- 5/3)

1. What is the Law of Demand? Law of Supply?

2. Describe 2 situations in which you would experience a SHIFT in supply and a SHIFT in demand. One should be for supply the other for demand.

After the quiz, work on- 22.2, p. 266

Sole Proprietorship

Partnership

Corporation

Sole proprietorship – a business owned and managed by a single individual. According to the IRS 75% of all businesses in the US are sole-proprietorships but these generate only about 6% of US sales.

Advantages Easy start-up (business licenses, site

permit, name of business) Sole receiver of profit Full control of business Easy to discontinue Not subject to special business taxes

Disadvantages Unlimited personal liability

› Liability is a legally bound obligation to pay debts. Sole proprietors are bound to all of their business debts

Limited access to resources Limited life – business lack

permanence beyond the life of the sole proprietor

Partnerships – a business organization owned by two or more persons who agree on a specific division of responsibilities and profits.

Advantages Easy start-up Shared decision making Specialization – each partner can bring

his or her talents Larger pool of assets – helpful when

the business needs to borrow money Not subject to special business taxes

Disadvantages Unlimited liability

› Each general partner is bound to debt incurred and responsible for paying this debt

General partners do not have absolute control over their business

Potential for conflict

Corporations – a legal entity owned by individual stockholders.

Stockholders own shares of stock – a certificated ownership in a corporations.

Stockholders are part owners of the corporation.

Advantages Limited liability for owners Transferable ownership – owners can

sell stock and get money in return Long Life – business does not end with

the death of the owners. More potential for growth

Disadvantages Expensive and difficult to start up Double taxes

› Corporations pay taxes on income.› Stockholders receive dividends (profits

paid out to stockholders)› Dividends are also taxed

Potential loss of control by the founders – Board of Directors usually run corporations.

More legal requirements and regulations

Horizontal Merger – joining of two or more firms competing in the same market with the same good or service

FTC blocked the merger of Staples, Inc and Office Depot. This action would have left the newly merged Staples in the position as the only large office supply superstore in most places around the country. This creates an unfair advantage for Staples in the market. Market research showed that Staples would have then been able to increase their prices up to 13 percent after the merger.

Vertical Merger – joining of two or more firms involved in different stages of producing the same good or service.

Ex: a baseball bat company merging with a wood production company or Time Warner Incorporated + the Turner Corp

(CNN,TBS), Conglomerate – merging of more

than three businesses that make unrelated products (Ex: Proctor and Gamble, General Electric, PepsiCo)

Multinational Corporation – a large corporation that produces and sells its goods and services throughout the world.

Advantages Provides jobs and products around the world Efforts to spread new technology around the

world Increase standard of living in many poor

countriesDisadvantages Low wages Poor working conditions

Objective: To describe the functions and measurements of the US Stock Market

p. 263

Corporations sell stock to raise funds.

Stock represents ownership in the corporation and is issued in portions called shares.

dividends- a portion of a corporation’s profit, usually paid out quarterly

capital gains- money made when an investor sells stock for more than he/she paid for it and lose money through:

capital loss- money lost when an investor sells stock for less than he/she paid for it or when a company doesn’t make a profit, and can’t pay out dividends

Stock split- when each single share of stock splits into more than one share. This is done to encourage investors to buy the stock, and generally results in a rise in stock value afterwards.

Stockbrokers- link buyers and sellers of stock; usually work for a brokerage firm that specializes in trading stock.

Stock is bought and sold on stock exchanges. Most important in the US:

New York Stock Exchange (NYSE)- the country’s largest and most powerful exchange; only for the largest and best-known companies (called blue chip companies)

OTC Market- stock sold electronically NASDAQ (National Association of Securities

Dealers Automated Quotations) - the American market for over-the counter trades 

Day traders- buy and sell stock rapidly in hopes of trying to make a profit; very risky

Bull Market- when the stock market steadily rises over a period of time (1920s and 1980s)

Bear Market- when stock market steadily falls over a period of time

Dow Jones Industrial - which represents about 30 large companies

or the

Dow Jones Industrial

S & P 500 (Standard and Poors) - which tracks price changes in 500 companies.

S and P 500

After the market reached an all-time high in 9/1929, over-speculation, inflated stock values, and buying on the margin led to a huge and swift fall in stock values. People panicked and rushed to sell their stocks, further lowering prices, ultimately leading to the Great Crash of 1929, and ushering in the Great Depression. An even larger crash occurred in 1987, but the economy recovered much more quickly.

Stock Market crash- Twitter hack

Stock Market Rap

How does the Stock Market Work

Classwork: Answer the questions on p. 264.

Find p. 265 and complete as we watch the video