sole traders- bus owned by 1 person.

Chap 4 sole traders- bus owned by 1 person.responsibility lies on him, no limited liability, e.g. hairdresser

• decision making
• profit keeping
• less capital
• cannot specialise, mistakes can be made

partnership- bus owned by 2 or more people, take share in profit and decision making. Partnership agreement advised.e.g. dentist

• can specialise
• more capital
• arguments on decisions
• share profits

limited liability- owners exist as a separate legal entity to the bus, only lose the amount of money they invested in -memorandum and article of association incorporated bus- have limited lia.shareholders- owners of limited company Ltd-private limited company- owned by shareholders, cannot sell share to the public, only to friends and families. 1 / 2

• more capital (from sale of shares)
• expertise & limited liability
• cannot sell share to the public
• rapid expansion not possible
• transfer of share has to be agreed by all teh

other shareholders Plc-public limited company- owned by shareholder, can sell shares to the public, tradeable on the stock exchange.

• rapid expansion possible (can sell shares to the

public

• limited liability, specialist manager hired
• expensive to become a plc
• divorce of ownership and control
• legal formalities

Chap 19 Fixed cost-do not vary with changes in output Variable cost- vary directly with changes in the output TR=P x Q

TC= FC + VC

Profit= TR - TC Average cost/unit= TC/Total output Increase profit -increase selling p

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