Екзаменаційний білет №16

FRANCHISING

A very interesting form of business is franchising, because it combines some advantages of both corporations and small businesses, such as sole proprietorship or partnership. In franchising, a large company (corporation) allows one or several entrepreneurs (franchisees) to use the corporate brand name. ln return franchisee has to pay the company a part of her or his profits and must observe the company's format. For instance, most McDonald's restaurants around the word are owned by franchisees with the McDonald's corporation as a franchiser. All the McDonald's fast food restaurants are practically identical whether they are owned by the corporation itself or by franchisees. That is the corporation's format that all franchisees have to observe.

Franchisees get training from the company that helps them manage their business and advertising. This continuous support is one of great advantages of franchising. Not less important is using the brand name of a company that is known and advertised nationally, or even worldwide. It is easier for a franchisee to raise money from banks than it is for a sole proprietor, because a franchisee has a large company's support. But there are disadvantages as well:

• a franchisee has less independence than other sole proprietors;

• he or she has to pay a part of his or her profits to the company (royalty payments);

  • a franchisee cannot sell his or her business if he or she does not have a franchiser's agreement . for doing so;

• renewal of the franchise is not automatic, so a franchisee can lose his or her franchise.

Екзаменаційний білет №17

WHAT IS ECONOMICS?

Economics is the social science that studies the production, distribution, and consumption of goods and services and the analyses of the commercial activities of a Society. The resources necessary to satisfy human wants or wants of a society are limited. Thus every society is faced with the problem of scarcity.

Scarcity refers to the choice between our limited resources and our unlimited wants and needs. For an individual, resources include time, money and skills. For a country, limited resources include natural resources, capital, labour force and technology. Because all of our resources are limited in comparison to all of our wants and needs, individuals and nations have to make decisions regarding what goods and services they can buy and which ones they must refuse. So, because of scarcity, people and economies must make decisions over how to allocate their resources. Economics, in turn, aims to study why we make these decisions and how we allocate our resources most efficiently. So economics is the social science that examines how people choose to use limited or scarce resources in attempting to satisfy their unlimited wants.

Macro and microeconomics are the two main points from which the economy is observed. Macroeconomics looks at the total output of a nation and the way the nation allocates its limited resources of land, labour and capital in an attempt to maximize production levels and promote trade and growth for future generations.

Microeconomics looks into similar issues, but on the level of the individual people and firms within the economy. It tends to be more scientific in its approach, and studies the parts that make up the whole economy. Analyzing certain aspects of human behaviour, microeconomics shows us bow individuals and firms respond to changes in price and why they demand what they do at particular price levels.

The resources that go into the creation of goods and services are called the factors of production. They include natural resources ("land"), human resources, capital and entrepreneurship. Capital is something created by people to produce other goods and services. Factories, tools and machines are capital resources. Entrepreneurship means the managerial or organisational skills used by firms to produce goods and services. Each factor of production has a particular function.

Micro and macroeconomics are intertwined; as economists gain understanding of certain phenomena, they can help nations and individuals make more informed decisions when allocating resources. The way in which a society goes about answering fundamental economic questions is its economic system. The market economy advocates forces within a competitive market to determine how resources should be allocated; in a command economy resources are allocated by government planners. Scarcity and unlimited wants force governments and individuals to decide how best to manage resources and allocate them in the most efficient way possible. Nevertheless, there are always limits to what the economy and government can do.