Research Paper

1 compare and contrast sole proprietorships, partnerships and corporation. In your essay describe each of these forms of business ownership (and compare them). And, provide three advantages of each based on text and class lectures.

Most business is uncomplicated, owner-operated operations, or what are known formally as sole proprietorships. The owner or manager takes all the responsible for liabilities incurred by the organization and has control over its actin.
Advantages of a sole proprietorship: * A sole proprietor completely control and decision-making power over business. * Sale or transfer can take place at the discretion of the sole proprietor. * There are no corporate tax payments for a sole proprietorship.
Disadvantage of a sole proprietorship: * The sole proprietor of the business held personally liable for the debts and obligations of the business. * Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company. * All responsibilities and business decisions fall on the shoulders of the sole proprietor.
Partnerships are business owned by two or more people who share responsibilities. The extra people can lead to easier to find funds and to do the work of the firm. No written agreement is needed to set up a partnership, though often the partners do write an agreement tailored to their particular needs. Partnerships are the most common business from in professions, such as accounting, law, and medicine.
Advantages of Partnership:
1.Easy formation: partnership has very simply and easy formation. The agreement among the partners either in oral or written words can bring a partnership into existence.
2. Partnerships create large resources: A partnership is in a position to absorb huger resources than one contributes capital. The additional financial strength of the partners can increase the scale of operation of the business.
3.Sharing of risk: the partners share the losses of the firm and other associated risk in business. More, the share of risk of each partner is less in comparison to sole proprietorship.
Disadvantages of Partnership:
Even though, partnership form of business is better than sole proprietorship form of business, however, still it is not the only best option available for an entrepreneur. The following are some of the important shortcomings of partnership form of organization which must b carefully studies before finalization of this form of business.
1. Limited capital: there is a maximum member that limited in a partnership. Therefore; the raised of capital would be limited too. According to the maximum memberships on a partnership, the large-scale business would be inconvenience to raise capital.
2. Unlimited liability: unlimited liability is an important drawback of partnership. The risk of loss of private property of the partnership influences the partners to avoid further risk and play safe.
3.Risk of implied authority: A partner acts as an agent of the firm and his acts bind the firm and other partners. A dishonest or incompetent partner may lead the firm in difficulties because the other partners shall have to pay for the dishonesty or inefficiency to another partner.
Corporation is simply a firm created by government charter. The charter licenses the corporation to exist and lays down the basis rules of its existence.
Advantages of corporation: * 1. Corporations can obtain more capital through the sale of their actions. * 2. A corporation can deduct the cost of benefits that offers to its * Managers and employees. * 3. This selection allows that the company is subject to a payment of taxes similar to * that of a society.
Disadvantages of a Corporation:
1.The process of integration requires more time and money to compare to other models of organization. * 2. The corporations are supervised and subject to rules of entities: federal, state and * some local, and therefore might have to comply with many more requirements and * administrative documents to demonstrate compliance. * * 3. The incorporation of a company could result in the payment of more taxes. *

2. compare monopolies, oligopolies, monopolistic competition, and pure competition (giving examples of each)
Monopolies: A single company owns most of the market for a given type of product or service. This would happen in the case that there is a barrier to entry into the industry that allows the single company to operate without competition, for example, vast economies of scale, barriers to entry, or governmental regulation. In such an industry structure, the producer will often produce a volume that is less than the amount which would maximize social welfare. An oligopoly is a market dominated by a few large suppliers. The degree of market concentration is very high. Firms within an oligopoly produce branded products and there are also barriers to entry.
Another important characteristic of an oligopoly is interdependence between firms. This means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets - which economists seek to model through the use of game theory. An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market. Examples of oligopoly:
- A few firms selling similar product
- Each firm produces branded products
- Likely to be significant entry barriers into the market in the long run which allows firms to make supernormal profits.
Monopolistic competition: In a monopolistic market a large number of sellers or producers sell differentiated products. It differs from perfect competition that the products sold by different firms are not identical. That is why in a monopolistic market sellers can sell differentiated products in slightly different price.
As example Nokia sells its Music Express phones in slightly higher price than the other music phones of other companies because of its differentiated features.
A simple example of monopolistic competition can be seen in car sales. There are many different types of cars on the market. None of car manufacturer dominates the market, with many competitors providing similar products in competition.
Pure competition, also called perfect competition, is an economic situation where a market has many sellers, none of which has a significant amount of market power. In perfect competition, goods are homogeneous, meaning the goods of one producer are exactly the same as the goods provided by another producer, and there are no barriers to entry or exit, meaning new firms can enter the market easily. The net effect of these factors is that under perfect competition, individual firms have no power to influence prices; the market determines prices. Examples: The flaw in considering the stock exchange, as an example of Perfect Competition is the fact that large institutional investors may solely influence the market price. Another very near example of perfect competition would be the fish market and the vegetable or fruit vendors who sell at the same place

3. compare market failure and government failure; providing at least 3 examples of each of these economically inefficient situations frequently occurring in our society

When an industry in the private sector is not performing efficiently or effectively, there is said to be “market failure”. For example, minimum wage requirements or price limits on specific goods and services. Market failure can also lead to positive externalities for third parties. For instance, an employer hires a state school system by pays them less benefits than the others.
Another case of market failure is the existence of 'public goods', defined as goods that are 'non-exclusive'—not paying any benefits for them.
The reason is that actual governments do not necessarily do what economists and others * want them to do because there is “government failure” as well as market failure. Before * recommending government actions to correct market failures, one should consider whether * actual government policies would worsen rather than improve private sector outcomes. * Since many factors often make for considerable government failure, considering such * failure is crucial and not just a theoretical fine point. Government can award subsidies to * firms, but this may protect inefficient firms from competition and create barriers to entry * for new firms because prices are kept ‘artificially’ low. Subsidies, and other assistance, can * lead to the problem of moral hazard. * Taxes on goods and services can raise prices artificially and distort the efficient operation of * the market. * Governments can also fix prices, such as minimum and maximum prices, but this can create * distortions which lead to: * Shortages, which may arise when government fixes price below the market rate. Because * public healthcare is provide free at the point of consumption there will be long waiting lists * for treatment.
Surpluses may rise when government fixes prices above the natural market rate, as supply will exceed demand.

4. compare and contrast the following political-economic systems:
1. Capitalism: an economic system characterized by private or corporate ownership of capital goods; and by prices, production and distribution of goods that are determined mainly by competition in a free market." It is interesting to note that the word "capitalist” used to be a synonym for a businessman or a business owner-- one who owned, produced, or invested in goods, and set the prices for them.
2. Communism: is a system of government, like democracy or dictatorship. The main point about it is that everyone is equal. There is no single person of small grouped of people who rule the others. There are also no social classes. However, it has been demonstrated that this system cannot work and usually becomes a dictatorship, for example: Stalin in the USSR and Mao Zedong in China
3. Socialism: There is another system that can be employed to distribute wealth in the capitalist economic system: it is known as "Socialism". Socialism involves government co-ownership or shared administration of capital between the government and private owners. It is sometimes characterized by government mandates or regulations, which are applied in the distribution of wealth.

Karl Marx made the strongest critique of capitalism. Marx preferred that all factors of production be held in common. To accomplish this, he called for the "Dictatorship of the Proletariat" as the form of government to oversee the employment of all the factors of production, as well as the distribution of wealth by means of the socialistic distribution system.

4. Fascism: Fascism, the more it considers and observes the future and the development of humanity quite apart from political considerations of the moment, believes neither in the possibility nor the utility of perpetual peace. It thus repudiates the doctrine of Pacifism -- born of a renunciation of the struggle and an act of cowardice in the face of sacrifice. War alone brings up to its highest tension all human energy and puts the stamp of nobility upon the peoples who have courage to meet it. All other trials are substitutes, which never really put men into the position where they have to make the great decision -- the alternative of life or death.

5. compare and contrast the concepts of federalism and separation of powers. Why did the framers of the U.S. constitution use these and other systems to set up checks and balances in our governmental systems.

Separation of powers is the separation of branches under the constitution by the legislative, judicial, and executive branches of government. Federalism is a government system that includes the national government, which shares sovereign powers with fifty state governments.
The difference between the separation of powers and federalism is slim to nothing. Federalism consists of the national government and the fifty states, in which the national government is defined by the separation of powers: the three branches of government. Federalism is the over view form of government that is stated in the Constitution which implies the separation of powers between central and regional government. On the other hand, separation of powers is the separation of branches under the national government. In other words, the separation of powers is a subunit of federalism.
The principle of separation of powers: It is a part of a system called check and balances. The check and balances play the roles of the three branches of government. This system was made so that no one branch wills over power the other. The three branches come together and help one another by being independent of the other. The legislative branch consists of the Congress, the judicial branch consists of the courts, and the executive branch consists of the president. For an example, when a bill is in progress and the chief executive does not approve of it, he can reject legislation and return it to the legislature with reasons for the rejection. This is a process called veto power.
The principle of federalism was established by the Constitution to protect the country from tyranny as well. In this case, it is said that the national government cannot over power the fifty states. In the fifty states, each state consists of two democratic representatives. Overall, the country contains one hundred representatives. For an example, California can make policies that can only affect residents in that state. It cannot affect any other state unless the other state chooses to imply that same policy. This helps tyranny because the separation of the national government and the fifty states shows the independency of each state and how different one state can be from another but equal less than one Constitution.

6. describe 3 reasons for and against interest groups in the American political system. Are interest groups when all is said and done a social good or a social evil?

An interest group is any organization that seeks to influence public policy. Interest groups are found in many societies, but there are an unusually large number of them in the United States.
1. The great number of social cleavages along income, occupational, religious, racial, and cultural lines.
2. The American constitutional system, which stimulates political activity, including interest group activity. Because of federalism and the separation of powers, there exist many different centers in which important decisions are made. Therefore many different interest groups can exercise some power. In Britain, on the other hand, groups are fewer in number and larger in scale.
3. The decline of political parties, which has made the wielding of power by interest groups more practical and seemingly more needed. In America with strong parties, interest groups-such as labor unions and professional societies-tend to be closely allied to parties.
There are two kinds of interest groups: institutional and membership. The former are individuals or organizations representing other groups. Typical of institutional interests are business, governments, foundations, and universities. Membership groups are supported by the activities and contributions of individual citizens.
Interest groups do not, therefore, arise spontaneously or automatically out of natural social processes. At least four factors help explain the rise of interest groups.
1. Broad economic developments. For example, the rise of mass-production industry allowed the rise of mass-membership labor unions.
2. Government policy. Public programs create constituencies with an incentive to organize to maintain their benefits. Veterans' benefits create veterans' groups; the licensing of professionals by state governments gives societies of doctors and lawyers a strong reason to exist. Sometimes the government supports the formation of organizations by providing benefits to their members. Sometimes government policies are designed to make private interest group formation easier, as was the case with the passage of laws in the 1930s to aid labor.
3. The more activities government undertakes, the more interest groups form as a response to those activities. Accordingly, public interest lobbies have increased since 1970, when government became active in civil rights, social welfare, and consumer rights.
If it is true that America has more interest groups than other nations, does it follow that more Americans belong to groups? The answer is no for unions and for business, professional, and charitable organizations. It is yes for civil or political organizations and religious associations. Americans' willingness to join civic or political organizations probably reflects a greater sense of civic duty and political efficacy here.
Interest group joiners tend to be high-status individuals: they have the income, the free time, and the wide range of interests necessary for group activity. Some believe that interest group activity therefore has an upper-class bias. However, this bias must be considered in light of political outputs and internal divisions within groups e.g. farmers.
Furthermore, we cannot assume that what an interest group does in the political arena is simply the expression of the interests of its members. Every political organization has an external political strategy and an internal recruitment strategy. These may be different or even in conflict. The active support of labor unions for civil rights legislation in spite of the opposition or skepticism of union members, and the consistently leftist positions of the National Council of Churches, which represents fairly conservative Protestants, are examples. Whether an organization's political position will represent its members' interests will depend on at least four factors.
1. The homogeneity of the group. The United States Chamber of Commerce consists of many different types of businesses and thus can say little or nothing about tariff s.
2. People's motives for joining. As long as union members are satisfied with the union's performance on bread-and-butter issues, and as long as Protestant churchgoers receive spiritual or social satisfaction in local congregations, the national AFL-CIO and the National Council of Churches can do pretty much as they please. Thus members motivated by solidary or material incentives will give great discretion to the staff to pursue their own goals.
3. The size of the staff. Organizations with large staffs are more likely to take political positions in accordance with staff beliefs. Furthermore, staffs will tend to have distinct views, either liberal/left (National Council of Churches) or conservative/right (American Farm Bureau Federation).
4. The level of militancy and activity of the membership. Members of some organizations, such as the John Birch Society or Greenpeace, tend to be passionately convinced of the rightness of particular policies. Leaders of these organizations will not find members indifferent or easily satisfied, and they will be forced to take strong stands-perhaps even stands they would prefer to avoid. Social movements also create dedicated interest groups, as exemplified by civil rights, feminism, and environmental groups.