Sole Trader
|
Partnership Firms
|
v Sole Proprietorship is a one man business
v Profits belong to the proprietor
v Losses can not be shared
v Division of labour is not possible
v It requires no agreement
v Effective control over the business
v Quick decisions can be taken
v Decisions are often hasty
|
v It is owned by 2-20 partners
v Profits are shared between partners
v Losses can be shared between partners
v Division of labour is possible
v It requires an agreement /deed
v No one partner has complete control
v It takes more time to make decisions
v Decisions are more reliable
|
Definition According to the Partnership Act 1890, “Partnership is a voluntary association of people (from two to twenty) which is formed...
- Disposable Income (Take Home Pay)
- Income Tax (A tax on consumer income)
- Wealth (Those assets with a money value)
- Inflation (A persistent rise in the price level)
- Rate of Interest (Cost of Borrowing, Reward for Saving)
- Social Security benefits (Aid to low-income members)
- Borrowing (Obtaining money as a loan)
- Age Composition of household population
- Increase in stock of cash
- Increase in bank deposits
- Increase in stocks or shares
- Disposable Income
- Social attitude towards saving
- Preparation for the future
- Purchase of durable goods
- Rate of Interest
- Rate of Interest
- Availability of credit facilities
- Demand for consumer durables
Consumer Spending 1. Who is a consumer? The person who uses the goods and services for final consumption 2. What is spen...
1. Variable Costs
- It refers to the cost of variable factors
- It changes with output
- There is no variable cost at zero output
- It is also known as Direct Costs
- Examples include Electricity bill, cost of raw materials etc.
- It refers to the cost of fixed factors
- It does not change with output
- It occurs at zero output
- It is also known as Indirect Costs
- Examples include Rent for the factory, Insurance Premium etc.
The sum of variable cost and fixed cost forms the Total Cost.
Total Cost = Variable Cost + Fixed Cost
Marginal Cost
It is the change in the total cost brought about by changing the output by one unit.
Average Total Cost
It is the cost per unit of output.
Average Fixed Cost
It refers to the Fixed Cost per unit of output.
Average Variable Cost
It refers to the Variable Cost per unit of output.
Meaning Cost of production refers to the prices paid by the firm in order to obtain the materials and services required for the productio...
Cost Cost refers to the amount of money spent by the firm on the goods and services which are required for the production process. ...
- The number of employees
- The value of the capital employed
- The value of the output
- The market share etc
- people’s preference of “something different” which cannot be produced under mass production,
- some services and products cannot be standardized so that it can easily be provided by small firm,
- people need individual attention for certain services like hair dressing provided by small firms,
- geographical factors limit the market. Small firms are successful in that case, and
- most of the expensive goods have a small market as their demand is less. Eg; sports cars, luxurious yachts etc. Again small firms succeed.
How do we measure the size of firms? The size of the firm is measured on the basis of the following criteria. The number of e...
- Born: 14 June 1946 (age 70 years), Jamaica Hospital Medical Center
- Height: 1.88 m
- Party: Republican Party
- Spouse: Melania Trump (m. 2005), Marla Maples (m. 1993–1999), Ivana Trump (m. 1977–1992)
- Children: Ivanka Trump, Tiffany Trump, Eric Trump, Donald Trump Jr., Barron Trump
Although the concept can also be executed through mail-order subscriptions, benefit events, and other methods, it is now often performed via Internet-mediated registries. This modern crowdfunding model is generally based on three types of actors: the project initiator who proposes the idea and/or project to be funded, individuals or groups who support the idea, and a moderating organization (the "platform") that brings the parties together to launch the idea.
Crowdfunding has been used to fund a wide range for-profit entrepreneurial ventures such as artistic and creative projects, medical expenses, travel, or community-oriented social entrepreneurship projects.
Former Walt Disney sculptor Chuck Williams raised USD 57,000 in just a week against the USD 34,000 target. He turned to Kickstarter ...
- To enjoy economies of scale: As the firm expands, it can reduce its average cost of production.
- To obtain a larger market share: A larger firm can exercise more control over price and output in the market. Large firms can also enjoy monopoly power.
- To achieve greater security: Firms can achieve greater security by extending the market for their products and producing a wide range of goods. (It is known as ‘Diversification’.) So that they can face the fluctuations in demand and seasonal variations.
- Vertical integration backwards occurs when a firm merges with its suppliers. For example; a tea factory takes over tea plantation.
- Vertical integration forwards occurs when a firm merges with its market outlets. For example; a petrol company takes over a number of petrol stations (ie. Retailers)
What is a firm? A firm is a unit of management trading under a particular name. It is a decision making production unit. An industr...
- reduce the value of Imports
- add the value of Exports
- reduce the value of Taxes and
- add the value of subsidies.
- The pattern of national expenditure
- The importance of different sectors of production
- The pattern of income distribution
- Fast population growth might lead to a lower PCI
- Rise in NI does not always reduce the gap between the poor and the rich
- A rise in NI brought about by a higher Inflation does not increase physical output
- NI might be higher due to long hours of work at the expense of leisure
- A rise in NI also increases Social Costs
- The calculation of NI does not include Black Market transactions as they are not recorded.
- the equality in the distribution of income and wealth
- the types of goods and services produced by the factors of production
- the Social Costs (like pollution) incurred due to economic activities
Definition National Income refers to the total money value of the output of goods and services produced by the factors of product...
- CNN
- NY Times
- LA Times
- Politico
- The Hill
- Buzzfeed
- Daily Mail
- BBC
President Donald Trump vowed this week to “do something” about the “cunning” media who he’s called “the enemy” of the American people an...
What is the 'General Equilibrium Theory'
General equilibrium theory, or Walrasian general equilibrium, attempts to explain the functioning of economic markets as a whole, rather than as individual phenomena. The theory was developed by the French economist Leon Walras. It stands in contrast with partial equilibrium theory, or Marshellian partial equilibrium, which only analyzes specific markets.
Walras developed general equilibrium theory to solve a much-debated problem in economics. Up to that point, most economic analyses only demonstrated partial equilibrium — the price at which supply equals demand and markets clear — in individual markets. It was not yet shown that equilibrium could exist for all markets at the same time.
Uses of General Equilibrium Theory:
General equilibrium theory tried to show how and why all free markets tended toward equilibrium in the long run. The important fact was that markets didn't necessarily reach equilibrium, only that they tended toward it. As Walras wrote in 1889, “The market is like a lake agitated by the wind, where the water is incessantly seeking its level without ever reaching it.”
General equilibrium theory builds on the coordinating processes of a free market price system, first widely popularized by Adam Smith's “The Wealth of Nations” (1776). This system says traders, in a bidding process with other traders, create transaction by buying and selling goods. Those transaction prices act as signals to other producers and consumers to realign their resources and activities along more profitable lines.
Walras, a talented mathematician, believed he proved that any individual market was necessarily in equilibrium if all other markets were also in equilibrium. This became known as Walras’ Law.
Assumptions:There are many assumptions, realistic and unrealistic, inside the general equilibrium framework. Each economy is considered to have a finite number of goods in a finite number of agents. Each agent has a continuous and strictly concave utility function, along with possession of a single pre-existing good (the “production good”). In order to increase his utility, each agent must trade his production good for other goods to be consumed.
There is a specified and limited set of market prices for the goods in this theoretical economy. Each agent relies on these prices to maximize his utility, thereby creating supply and demand for various goods. Like most equilibrium models, markets lack uncertainty, imperfect knowledge or innovation.
Alternatives to General Equilibrium Theory:
Austrian economist Ludwig von Mises developed an alternative to long-run general equilibrium with his so-called Evenly Rotating Economy (ERE). This was another imaginary construct and shared some simplifying assumptions with general equilibrium economics: no uncertainty, no monetary institutions and no disrupting changes in resources or technology. The ERE was designed to illustrate the necessity of entrepreneurship by showing a system where none existed.
Another Austrian economist, Ludwig Lachmann, argued the economy is an ongoing, non-stable process replete with subjective knowledge and subjective expectations. He argued that equilibrium could never be mathematically proven in a general or non-partial market. Those influenced by Lachmann imagine the economy as an open-ended evolutionary process of spontaneous order.
Source: Investopedia
What is the 'General Equilibrium Theory' General equilibrium theory, or Walrasian general equilibrium, attempts to explain the f...
Introduction to National Income
- Definition
- Methods of Measuring the National Income
- Reasons for Measuring the National Income
- National Income and General Welfare
Introduction to National Income Introduction Gross Domestic Product Gross National Product Net National Product National In...
Output | Total Cost | Selling Price | Total Revenue | Total Profit | Profit/Loss |
0 | 100 | ---- | ---- | -100 | Loss |
1 | 300 | 200 | 200 | -100 | Loss |
2 | 450 | 200 | 400 | -50 | Loss |
3 | 600 | 200 | 600 | 0 | Break Even |
4 | 700 | 200 | 800 | 100 | Profit |
5 | 775 | 200 | 1000 | 225 | Profit |
6 | 800 | 200 | 1200 | 400 | Profit |
Cost Cost refers to the amount of money paid out by the firm in obtaining resources required to carryout production. Revenue ...
Small firm
|
Large firm
| |
Total cost
|
36
|
48
|
Output
|
4
|
8
|
Average cost
|
9
|
6
|
- Diseconomies of scale arises when the expansion of the firm leads to a rise in long run average cost.
- Optimum size refers to a situation where a firm operates at the lowest possible average cost.
- The firm can employ the technique of division of labour (ie. Specialization).
- The firm can acquire and use large capital equipments.
- The firm can use ‘waste’ products to produce by-products.
- It can spend large sums of money on research and development.
- It can also achieve technical economies of scale by full utilization of machines & equipment.
- They make bulk purchases raw materials at lower prices (due to trade discount).
- They can employ experts in marketing and other departments.
- Their unit cost of advertising is low (because they advertise varieties of goods at cheap rates.
- Large firms enjoy preferential treatment regarding supply of raw materials & in transportation.
- Handling and packaging costs of large firms are also very low.
- They can spread the risk by producing variety of goods (diversification)
- They can extend the market to overseas countries. For example; Coca Cola Company.
- Supply of skilled labour: Localization and expansion of the industry make the labour force of the region more skilled. Newly entering firm has not to spend on training. It leads to lower average cost.
- Dis-integration: As the industry grows different firms specialize in different works of the whole industry. (This separation of the industry is referred to as dis-integration). As a result all firms can achieve internal economies of scale. At the same time individual firm can achieve external economies of scale as they can obtain the products of the industry at lower prices.
- Subsidiary industry: When a large industry is established in an area many subsidiary industries are established themselves to cater the needs of all firms. For example; fishing industry and boat building.
- Specialized services: When industries are localized in an area the firms providing specialized services in that locality grow to facilitate the industries and further lower the average cost.
Economies of Scale Economies of scale refers to the fall in long run average cost of the firm due to expansion of its scale of prod...
- Households provide firms with land, labour and capital
- Firms employ the factors of production and make payments to households in the form of rent, wages and salaries, interest and profits.
- Households use their income to buy goods and services form firms.
- An economy not only consists of Households and Firms, but also includes the Government
- Countries also take part in trade with other countries
- Firms often invest in the production of capital goods
- Households do not always spend all their income but also save a proportion of their income
- Investment (I)
- Government Spending (G)
- Exports (X)
- Savings (S)
- Taxes (T)
- Imports (M)
- pattern of expenditure
- income distribution
- the level of employment etc
- increase its spending and investment or
- reduce saving and taxation.
- reduces injections (Investments, Government Spending and Exports) or
- increases Leakages (Savings, Taxes and Imports)
Definition The Circular Flow of Income (CFI) refers to the continuous circulation of income and expenditure among the economic agents. ...
11 MPs of the main opposition Maldivian Democratic Party (MDP) and 09 MPs of the Jumhooree Party (JP) also voted in favour of the unprecedented changes.
Abdul Bari Abdulla | MDP |
Abdul Gafoor Moosa | MDP |
Abdulla Shahid | MDP |
Ahmed Marzoog | MDP |
Ali Azim | MDP |
Ali Nizar | MDP |
Ibrahim Naseer | MDP |
Ibrahim Shareef | MDP |
Mohamed Abdul Kareem | MDP |
Mohamed Nazim | MDP |
Moosa Manik | MDP |
Abdulla Ahmed | JP |
Ahmed Mubeen | JP |
Faisal Naseem | JP |
Hussain Mohamed | JP |
Hussain Shahudhee | JP |
Ibrahim Hassan | JP |
Ilham Ahmed | JP |
Moosa Nizar Ibrahim | JP |
Qasim Ibrahim | JP |
These 06 MDA MPs Voted YES.
Hussain Areef | IND (Later joined MDA) |
Ahmed Amir | MDA |
Ahmed Siyam Mohamed | MDA |
Ali Mauroof | MDA |
Mohamed Ismail | MDA |
Umar Hussain | MDA |
Abdul Latheef Mohamed | PPM |
Abdul Raheem Abdulla | PPM |
Abdulla Khaleel | PPM |
Abdulla Maseeh Mohamed | PPM |
Abdulla Rifau | PPM |
Abdulla Sinan | PPM |
Abdulla Yamin | PPM |
Ahmed Asad | PPM |
Ahmed Azhan Fahmy | PPM |
Ahmed Faaris Maumoon | PPM |
Ahmed Nihan Hussain Manik | PPM |
Ahmed Rasheed | PPM |
Ahmed Rasheed Ibrahim | PPM |
Ahmed Saleem | PPM |
Ahmed Shiyam | PPM |
Ahmed Thariq | PPM |
Ali Arif | PPM |
Ali Fazad | PPM |
Ali Mohamed | PPM |
Ali Saleem | PPM |
Ali Shah | PPM |
Asma Rasheed | PPM |
Hassan Mufeed Abdul Gadir | PPM |
Hussain Manik Don Manik | PPM |
Hussain Mohamed Latheef | PPM |
Ibrahim Didi | PPM |
Ibrahim Falah | PPM |
Ibrahim Riza | PPM |
Ibrahim Shujau | PPM |
Jameel Usman | PPM |
Jaufar Dawood | PPM |
Mohamed Abdulla | PPM |
Mohamed Ali | PPM |
Mohamed Ameeth Ahmed Manik | PPM |
Mohamed Hussain | PPM |
Mohamed Musthafa | PPM |
Mohamed Nasheed | PPM |
Mohamed Shahid | PPM |
Mohamed Waheed Ibrahim | PPM |
Muaz Mohamed Rasheed | PPM |
Nazim Rashaad | PPM |
Riyaz Rasheed | PPM |
Saud Hussain | PPM |
Saudulla Hilmy | PPM |
Only These 14 MPs voted NO.
Anara Naeem | ADP |
Ahmed Mahloof | IND |
Abdulla Riyaz | JP |
Ali Hussain | JP |
Ahmed Nashid | MDP |
Eva Abdulla | MDP |
Fayyaz Ismail | MDP |
Ibrahim Mohamed Solih | MDP |
Imthiyaz Fahmy | MDP |
Mariya Ahmed Didi | MDP |
Mohamed Aslam | MDP |
Mohamed Falah | MDP |
Mohamed Rasheed Hussain | MDP |
Rozaina Adam | MDP |
On 22nd July 2015, the Maldives parliament amended the constitution to authorise foreign ownership of land or freeholds in the Maldives with...
recent posts
Blog Archive
- July 2020 (1)
- June 2020 (2)
- April 2020 (1)
- August 2019 (1)
- December 2018 (8)
- February 2018 (2)
- October 2017 (4)
- June 2017 (1)
- April 2017 (1)
- March 2017 (36)
- February 2017 (85)
- January 2017 (183)
- December 2016 (122)
- November 2016 (66)
- October 2016 (21)
- December 2014 (4)
- October 2014 (2)
- September 2014 (1)
- May 2013 (49)
- April 2013 (42)
- March 2013 (4)
- February 2013 (94)
- January 2013 (22)
- December 2012 (9)
- April 2012 (71)
- March 2012 (21)
- February 2012 (49)
- January 2012 (1)
- September 2011 (2)
- June 2011 (80)
- November 2010 (45)
- June 2010 (40)
- March 2006 (20)
O/L MCQ
- June 2010 (5)
- June 2011 (78)
- MCQ: June 2010 (1)
- MCQ: June 2011 (2)
- MCQ: June 2012 (41)
- MCQ: November 2010 (7)
- MCQ: November 2012 (43)
- November 2010 (38)
Economists and their Quotes
- Adam Smith (18)
- Alfred Marshall (9)
- Keynes (10)