by Avery Lazewski
Terms & Concepts
The Rise of Big Businesses
Economic system where the factors of production are controlled by the individual and where supply and demand drives the market.
Individuals who invest capital in a business and take a risk in hopes of reward.
TYPES OF BUSINESSES
PROPRIETORSHIP: A business owned by an individual or family
PARTNERSHIP: A business owned by two or more people
CORPORATION: A business that sells stock
HOW DOES A CORPORATION WORK?
A % of ownership of the company
Share of the profits
Owned by stockholders
Not responsible for debt
Run by a board of directors
Sells stock to raise $
WHY A CORPORATION?
Became to large for 1 person to manage
Easier to raise large amounts of capital
Business became national then international
Necessary as business expanded
John D. Rockefeller
90% of US oil
HOW'D THEY DO IT?
When a number of companies consolidated and ran their business as one corporation
Trusts could lower prices and drive competitors out of business
When one company controlled an entire industry they had a
When one company controls & dominates an entire industry monopolies can:
- Drive competitors out of business by cutting prices
- Take advantage of consumers by raising prices or lowering supplies
- Limit Consumer Choice
Owning all the means of producing your good
from start to finish
Limited control, No regulation
1890: Sherman Antitrust Act