Sample Economics Paper on Microeconomic Concepts

Sample Economics Paper on Microeconomic Concepts

 

Microeconomic Concepts

  1. Describe the pros/cons in each of the three forms of business organization: [6pts]
Sole proprietorship Partnership Corporation
Pro:

·      The owner has complete control on running of the business.

·      The owner can easily and conveniently transfer or sell the business.

·      There is no payment of corporate tax that strains business operations.

Con:

·      It is not easy for other investors to invest in the business.

·      All responsibilities and risks associated with business rests on the owner alone.

Pro:

·      It is easy to raise capital to start as partners contribute for such an initiative.

·      Risks and responsibilities are shared and do not rest on one person.

·      Better decision making due to comprehensive consultations.

Con:

·      Profits are shared equally and can lead to inconsistency and disagreements.

·      Each partner carries liabilities and risks associated with business activities.

 

Pro:

·    Additional capital can be raised through sale of shares.

·    Shareholders are not liable for any loss or risks incurred.

·    Some corporations may be exempted from tax to boost performance.

Con:

·      Profits may be subjected to more taxation by the government.

·      Requires a lot of time and paperwork to start compared to other forms of business.

 

  1. Explain the role of profit as an incentive for entrepreneurs. [2pt]

Profit plays a greater role as an incentive for entrepreneurs because it opens up avenues to increase efficiency and productivity of employees. Moreover, profit sharing improves professionalism in business activities and when stable it promotes other incentive programs that are in the interest of the business.

  1. Describe 3 purposes Labor Unions serve. [3pt]

They advocate for better salaries for their members so that remuneration is equivalent to work done. Consequently, they advocate for better and safer working environments and train and develop capacities of their members.

  1. Define: [6pts]
  2. Liability- In business it is a financial debt or obligation that arise in the process of conducting business activities.
  3. Stock- This is a kind of security that signify ownership and can represent a claim for a member.
  4. Vertical Merger- this is a merger existing between business entities operating at separate stages of production for a specific product.
  5. Horizontal Merger– A merger existing for business operating in the same space and level so as to wade off competition.
  6. Productivity- Describes various measures and initiatives that can be used to measure efficiency of production in business and companies.
  7. Unskilled Labor- Workers who do not possess requisite knowledge and skills acquired through education or training.
  8. What is the difference between General Liability and Limited Liability? [2pt]

Partners in general liability shall all the risks and liability unlike in limited liability where all partners are not accountable for the risks of the business.

  1. What is the relationship between education, productivity, and wages? [1pt]

Education is required to increase or improve productivity and when this happens then compensation is done through wages. In other words, wages are paid based on education level of a workers and this also determines the level of productivity.