Jade, Kelly, and Lila organize a nonprofit business¾JKL Markets, Inc.¾to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL. Because the firm is a nonprofit entity, it is able to sell the groceries for less than a commercial grocer could. What form of business organization is JKL Markets? Is it significant that JKL is incorporated?
What will be an ideal response?
JKL Markets is a cooperative. A cooperative is an association that is organized to provide an economic service, without profit, to its members. It does not matter whether the firm is incorporated, although an incorporated cooperative is subject to state laws governing nonprofit corporations. Cooperatives that are unincorporated are often treated like partnerships. A cooperative like JKL Markets is generally adopted by groups of individuals to pool resources to gain an advantage in the marketplace. For example, here the cooperative can obtain lower prices through quantity discounts.
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