Notes, summaries, assignments, exams, and problems for Economy

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Sole Proprietorship: Advantages, Disadvantages, and Characteristics

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Sole Proprietorship

A sole proprietorship is a business structure where an individual owns and operates the business. The owner contributes the capital, manages operations, and is solely responsible for the business's outcomes. They may work alone or employ others. This structure is the easiest to form and simplest to organize. The sole proprietor can borrow funds or utilize others' money for business purposes.

Advantages of Sole Proprietorship

Easy to Start

Forming a sole proprietorship is easier than partnerships or corporations. There are no legal formalities like agreements, memorandums of association, or articles of association.

Easy to Dissolve

Dissolving a sole proprietorship is simple, as the owner doesn't need permission from shareholders... Continue reading "Sole Proprietorship: Advantages, Disadvantages, and Characteristics" »

Poverty and Inequality Policies in Switzerland

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Switzerland's poverty and inequality policies strive for an equitable society, focusing on tailored aid like social assistance and housing support. Despite a low official poverty rate, certain groups, like single-parent households and immigrants, face vulnerability due to high living costs and limited job prospects. To address these challenges, a multifaceted approach is crucial, encompassing better education access, economic growth, and reinforced social safety nets. Additionally, policymakers must confront systemic barriers and invest in affordable housing, healthcare, and education to foster inclusive development.

Social Safety Nets and Support Programs

Switzerland helps people who need support through different programs and guarantees. These... Continue reading "Poverty and Inequality Policies in Switzerland" »

Global Market Management: Strategy & Opportunity

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Managing in the Global Marketplace

When companies conduct business in other countries, managers must understand that international business is fundamentally different from local (domestic) business.

The primary reason is that countries are inherently different. They possess distinct cultures, laws, political systems, economies, and levels of development. These significant differences necessitate adjustments in how companies operate globally.

For example:

  • Selling a product in Brazil is not the same as selling it in Germany.

  • Managing American workers is very different from managing Japanese workers.

  • In Mexico, fostering strong government relationships may be crucial, whereas in Britain, it might be less significant.

Managers also need to address critical... Continue reading "Global Market Management: Strategy & Opportunity" »

Public Funding Program Lifecycle: From Needs Analysis to Impact Assessment

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Study of Socioeconomic Problems and Needs: D: An analysis of socioeconomic needs is conducted to identify the issues that public funds should address.R: It is crucial to ensure that funds are allocated to areas that truly need them, aligning program objectives with the real needs of society.Issuance of Call for Proposals Terms and Conditions:D: Objectives, beneficiaries, eligible concepts, and deadlines of the call are defined.R: This stage ensures transparency and clarity in eligibility criteria and program objectives, facilitating the participation of companies and other interested parties.Publication of the Call:D: The call is made public so that interested parties can submit their applications.R: It is fundamental to ensure that all stakeholders... Continue reading "Public Funding Program Lifecycle: From Needs Analysis to Impact Assessment" »

Taxation of Income from Other Sources in India: Key Q&A

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Income from Other Sources: Key Questions and Answers

Q1. What is the name of the fifth head of income?

Ans: Income from other sources.

Q2. What are the essential conditions for chargeability of income under the head 'Income from Other Sources'?

Ans: The following conditions must be satisfied:

  • (i) There must be an income that is not exempted from tax.
  • (ii) The income must not be chargeable under any of the first four heads (i.e., other than the head 'Income from Other Sources').

Q3. Write two examples of income that are chargeable under the head 'Income from Other Sources'.

Ans:

  • (i) Winning from lotteries
  • (ii) Winning from crossword puzzles

Q4. Under which head is the salary of MP/MLA charged?

Ans: Income from other sources.

Q5. Define the term 'security'

... Continue reading "Taxation of Income from Other Sources in India: Key Q&A" »

Welfare State Evolution: Foundations, Challenges, and Policy Solutions

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What are the Three Fundamental Reasons for the Welfare State's Existence?

The three fundamental reasons for the existence of the welfare state are:

  • To assist the economically disadvantaged.
  • To address market failures, such as inefficiencies in private insurance and pension systems.
  • To support economic growth.

What is the Difference Between Risk and Uncertainty, and How Does the Welfare State Address Both?

Risk refers to situations where the probabilities of possible outcomes are known, while uncertainty is when these probabilities are unknown. The welfare state copes with both scenarios by collectively spreading the risk across a large number of people and adjusting contributions as necessary. This differentiates it from private insurance, which... Continue reading "Welfare State Evolution: Foundations, Challenges, and Policy Solutions" »

Business Organizations: Structures & Key Concepts

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Chapter 3: Business Organizations

There are five main forms of business organizations in the private sector:

  1. Sole Traders
  2. Partnerships
  3. Private Limited Companies (PLCs)
  4. Public Limited Companies (Ltd.)
  5. Co-operatives

Key Business Terms

Limited Liability: This term refers to the owners of a company (shareholders). They are not held responsible for the debts of the company they own. Their liability is limited to the investment they made in buying the shares.

Partnership Agreement: A written and legal agreement between business partners. While not essential, it is always recommended.

Sole Traders: The most common form of business organization. It is a business owned and operated by one person.

Partnerships: A group or association between 2 and 20 people who... Continue reading "Business Organizations: Structures & Key Concepts" »

Hedging and Speculation with Futures and Options

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Hedging with S&P 500 Index Futures

SIF hedging: NF = VF(antiguo) = Fo x Z. NF (Number of contracts) = Vp (portfolio value) / (VF x Bp) (Beta). With this hedge, risk is removed. If the index goes up, the profit in the portfolio will be offset by losses in SIFs contracts and vice versa.

Example: S&P 500 falls 5%:

  • In the portfolio: Rp = Bp x (-5%) = -10% of a portfolio of $10M, resulting in $9M (Final Value).
  • In the SIFS contracts: Si = 980 (S&P 500 value given) x 0.95 (100% - 5%) = 931. Fi = 931 x (1 + 0.04 x 5/12 (next month timeframe)) = 946.52. VF = NF x (Fi - Fo) x Z (250).
  • Gain on futures: VF(New) / Equity portfolio value.
  • Outcome stock portfolio: 2 x (-5%) = -10%.
  • Final Value portfolio: $10M - $1M + VF(New).

Margin Payments

Margin payments... Continue reading "Hedging and Speculation with Futures and Options" »

Understanding Legal Persons, Assessees, and Export Marketing

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Defining "Person"

A "person" can refer to various legal entities:

  1. Individual: A natural human being.
  2. Hindu Undivided Family (HUF): A family unit with common ancestors, treated as a single entity for tax purposes (India).
  3. Company: A corporate entity registered under the Companies Act or similar law.
  4. Firm: Partnership firms and limited liability partnerships (LLPs).
  5. Association of Persons (AOP) or Body of Individuals (BOI): A group with a common purpose, with or without a formal partnership.
  6. Local Authority: Municipal corporations, panchayats, and other local governance bodies.
  7. Artificial Juridical Person: Entities like trusts, universities, or temples, recognized by law.

Defining "Assessee"

An "assessee" is a person liable to pay taxes:

  1. Ordinary Assessee:
... Continue reading "Understanding Legal Persons, Assessees, and Export Marketing" »

Understanding Firms: A Business Economics Perspective

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What is a Firm?

Let us now try to understand the meaning of a 'firm'. A firm is a focal point of the production system of any country. A firm produces goods with the help of its own resources. Sometimes these resources are borrowed from outside, and they are paid remuneration (price) for using them, for example, land, labor, capital, etc. A firm is an organizational unit, while a plant is a 'technical unit'. The objective of a firm in organizing such factors of production is to maximize profit. In other words, profit is the main objective of a firm. Any decision of a firm is taken in accordance with this objective.

Two Views of a Firm in Business Economics

In business economics, a firm is considered in two ways:

  1. From the theoretical point of view.
... Continue reading "Understanding Firms: A Business Economics Perspective" »