understand the answers to these questions, it is useful to separate firms into two groups: private and public.

A private company is frequently owned by the people who generally run it on a day-to-day basis. Individuals
can run a private company. We call this a sole proprietorship. If a group runs it, we call it a partnership. A

private company can also be a corporation, but with no publicly issued stock. A small law firm run by one

person, even if it employs some other lawyers, would be a sole proprietorship. Partners may jointly own a

larger law firm. Most private companies are relatively small, but there are some large private corporations,

with tens of billions of dollars in annual sales, that do not have publicly issued stock, such as farm products

dealer Cargill, the Mars candy company, and the Bechtel engineering and construction firm.

When a firm decides to sell stock, which financial investors can buy and sell, we call it a public company.
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