Joe and Sam Set Up an Import/export Business in Partnership

question 90

Essay

Joe and Sam set up an import/export business in partnership, but they needed extra money. Harry was invited to invest as a limited partner. Unfortunately, the business began to lose money because of the poor business sense of Joe and Sam. Harry has the business expertise to turn the business around, or at least, so he thinks. What would your advice be to Harry in these circumstances?

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Definitions:

Break-even Point

The point at which total costs and total revenues are equal, meaning that a business, project, or investment is neither making a loss nor a profit.

Normal Profit

The minimum profit necessary for a company to remain competitive in the market; it corresponds to the opportunity cost of capital.

Product Price

The amount of money charged for a product or service, determined by factors such as cost of production, market demand, and competition.

Curve Steepness

The rate at which the slope of a curve increases or decreases, often used in economics to describe the sensitivity of one variable to another.