Partnership, Corporations

The fatures of laissez-faire capitalism are:

Private ownership of property=economists recognize three categories of resources(factors of production):ladn-includes tha land and the natural resources on and in the land,labour-is the work performed by people and capital-includes financial resources,buildings,anso on that are used in an organization’s operations.

Economic freedom=for th owners of land and capital,this freedom includes the right to rent,sell,or invest their resources and the right to use their resources to produce any product and offer it for sale at the price they choose.For workers this economic freedom means the right to accept or reject any job they are offere.For all individuals,economic freedom includes the right to purchase any goods or service that is offered for sale by producers.

Competitive markets= that is composed of large numbers of buyers and sellers,that ensure the existence of competitive markets,because sellers and buyers can enter markets as they choose.

Limited role of government=in smith’s view the role of government should be limited.Government should act only as a rule makerand umpire.,should provide lawsthat ensure economic freedom and promote competition.

What to produce?The question is answered by consumers as they spend their money for goods and services.So,consumers with their actions by buying any products tell what to produce.

How to produce?Competition within various markets determines which resources wiil be used.Producers try to use the most efficient combination of resources.If the price of one needed resources becomes too high,producers will look for substitute resources-say,plastic in place of metals.

For whom to produce?In a market economy,goods are distributes to those who have the money to purchase them.

CLASIFICARI ale intreprinderilor

By type of primary profit-generating activity enterprises:

Industrial,agricultural,commercial,service,investment,ensurance enterprises.

By the source of origin of the registered capital enterprises:

Public,private,mixed,enterprises with foreign investments.

By number of employees : small,medium-sized and large-scaled enterprises.

By form of business ownership enterprises may be: sole proprietorship,partnerships,corporations.

By the objective of the company’s activity:commercial and non-commercia enterprises.

ADVANTAGES OF SOLE PROPRIETORSHIP

Ease and low cost of formation and dissolution-No contracts,agreements,or other legal documents are required to start a sole proprietorship.If the enterprise does not succeed,or the owner decides to enter another line of business,the firm can be closed as easily as it was opened.

Retention of all profits All profits earned by asole proprietorship become the personal earnings of its owner. It is this direct financial reward that attracts many entrepreneurs to the sole proprietorship form of business.

Flexibility A sole owner can respond to changes in market conditions much more quickly than the operators of other forms of business.The sole owner of a bsiness is completely free to make decisions about the firms operations.

Possible tax advantages A sole proprietorship does not pay the special state and federal income taxes that corporations pay.

Secrecy Sole proprietorship are not required by federal or state governments to publicly reveal their business plans,profits or other vital facts.

DISADVANTAGES OF SOLE PROPRIETORSHIP

Unlimited liabilityis a legal concept that holds a sole proprietor personally responsible for all the debts of his or her business.

Lack of continuity The sole prop I the business,and if the owner dies or is declared legally incompetent,the business ceases to exist.

Limited Ability to borrow Banks and other lenders are usually unwilling to lend large sums to sole proprietorship,that can keep a sole proprietorship from growing.

Limited business skills and knowledge Often the sole proprietorship is also the sole manager,consequently the business ca nsuffer in the areas in which the owner is leess knowledgeable.

Lack of opportunity for employees emploees don’t want to work for a single owner because they don’t have the chance to be promoted.

SOCIALISM-the key industries are owned and controlled by government.What to produce and how to produce is accordance with national goals.Such industries usually include transportation,public utilities,communications.

Communism-All economis resources are owned by the government in this country. The basic economic questions are answered through centralized state planning,witch sets prices and wages as well.In this planning,the needs of the state generally outweigh the needs of its citizens.