Sole Proprietor Characteristics

1. a) Three types of are:

• Sole Proprietor- a single individual overseeing a business. 5 characteristics of a sole proprietor are:

1. the owner of the establishment is responsible for the business’ debts

2. its name can be determined by the owner eg. Roger’s Electronics

3. all contracts/legal documents must be signed by the owner

4. capital cannot be raised if it is earned from selling interest

5. it is easy and simple to establish a sole proprietor business

• Partnership- individuals under the agreement to share profits earned from a business. 5 characteristics of a partnership business are:

1. Each individual is responsible for each other actions

2. They oversee the business together and therefore share profits/losses

3. Since it is more

The main objective is to sell the excess at a reduced price so a loss will be avoided. E.g. In the airport services, last minute seats that are available, will be at a reduced price since it is better than not selling the seat at all.

Third Degree price discrimination requires the firm to have:

• Monopoly power i.e. be able to change prices within limits

• Being able to separate the market into different groups so as to be able to charge different prices. E.g. time/location

• For each different group the demand for the good will be different and therefore the firm will be able to charge each group accordingly to maximise profits.

E.g. cinemas may charge adults $10 but children under the age of 10 $5 or taxi drivers may charge $5 from San Fernando to Gulf City but due to a popular event on the weekends at Gulf City, the fare goes from $5 to $20.

2. a) Taxes can be defined as a fee, sum of money or even a contribution, that the government decides based on a worker’s income and/or profits in a business. This is usually dedicated to state revenue. It can also be added to goods and

a) A Free economy is basically an economy in which transactions between buyers, sellers or even traders, can be accomplished without the intervention of the state/government(E.g. no taxes, subsidies). The prices decided are based on mutual agreement. E.g. Singapore, New Zealand. 2 Characteristics of a free economy are Private property- gives the freedom to use their own property to benefit from a profit, and Freedom of choice- owners, consumers etc are allowed to conduct business in the free market(buy, sell, trade). A planned economy is one in which the government has control over all the resources and determines the prices as well. The government controls all the processes from distribution to prices and what and who can produce and to whom. 2 characteristics of this are goods andn services will be affordable to all since it is governed and more employment opportunities since the government seeks to give employment to everyone. E.g. North Korea, Cuba, Iran. A mixed economy is a combination of a free and planned economy, such that, the private sector as well as the state/government oversee the