Economics: Resource Markets, Price Controls, and Consumer Choice
Chapter 4: Resource and Product Markets
The Link Between Resource and Product Markets
- The markets for resources and products are closely linked.
- Changes in one will affect the other.
Economics of Price Controls
Price Ceilings
- A price ceiling is a legally established maximum price that sellers may charge.
- The direct effect of a price ceiling below the equilibrium price is a shortage: quantity demanded exceeds quantity supplied.
Secondary Effects of Price Ceilings
- Reduction in the quality of the good.
- Inefficient
Funding Options: Short-Term & Long-Term Business Finance
Short-Term Financing
Overdraft (Banking)
Extending an upper limit of credit tells you the current balance. The bank accepts the overdraft depending on the solvency of the company.
Credit Account Policy
The bank offers a company account and a term. As long as you do not incur charges, you do not pay interest.
Factoring
Several companies offer factoring services:
- Buyer investigation and risk classification management.
- Bill collection.
- Coverage of commercial risk.
- Invoice finance up to a maximum of 85%.
- Sales
Understanding Public Sector Economics and Fiscal Policy
The public sector includes the economic activities of a nation that fall within the governmental sphere.
Economic Policy
Economic policy: government intervention in the economic affairs of a country in order to achieve certain objectives.
Goals of Economic Policy
A goal of economic policy is any general aspiration that a society seeks to achieve.
Economic Policy Objectives
- Economic Growth: Increase of production without exhausting resources. It is measured by the average annual growth rate of GDP or GDP
U.S. Federal Tax Concepts: Q&A on Authority, Planning, Compensation, Retirement, and Property
Chapter 2: Tax Authority & Legislation
- Which of the following statements is incorrect? (Answer: C)
- a. Tax periodicals are secondary authorities.
- b. A particular court of appeals need not follow the decisions of another court of appeals.
- c. Revenue procedures have higher authority than temporary regulations. (Incorrect: Temporary regulations generally have higher authority.)
- d. A disadvantage of electing to use the small claims division of the Tax Court is that the court decision is final and cannot
Key Financial Accounting Concepts Explained
Net Income
The residual amount of earnings after all expenses have been deducted from sales. In short, gross income is an intermediate earnings figure before all expenses are included, and net income is the final amount of profit or loss after all expenses are included.
Net Sales
Net sales represent total revenue, less the cost of sales returns, allowances, and discounts. This is the primary sales figure reviewed by analysts when examining a business’s income statement.
Statement of Cash Flows
A financial
Read MoreUS & European Banking Regulation History: 1900-Present
USA Banking Regulation: 1900-1920
Federal Reserve Act (1913)
- Composed of 12 Federal Reserve Banks.
- Established the Fed as the lender of last resort.
McFadden Act (1927)
Introduced geographical restrictions to the banking business.
Western Europe Banking: 1900-1920
Post-First World War Period
A flourishing period followed the peace treaty signature, but a recession occurred in 1920-1921.
Key Characteristics:
- Close links between banks and industrial corporations.
- Prevalence of the universal banking model.