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Slide 1

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Reducing corporation
tax for small firms Sole trader ­ 1
Govt policy aimed to boost
no. Of small firms by A unit of production
making it easier to Private limited distinguished from other Partnership ­
establish and grow company ­ issue
units of production by the 2-20 people
shares ­ offer shares
type of owner ship
Emphasis placed on
small firms PLC (public limited
company) ­ floated
on stock exchange
Many companies trying to Profit = revenue - costs
Revenue ­ all
diversify ­ to spread their Firms income
Annual turnover Level of
(revenue) profit
Single firm may How many
branches Size
operate in a variety of
How many
Primary Value of assets employees
Brand loyalty
Quaternary Can also be
distinguished by:
Tertiary…read more

Slide 2

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Owners of the company.
Aim to have higher Want lower
The more interested you
wages and better prices and higher
are the more shares you
conditions, pushing up quality products
would hold
costs. Average costs will
Stakeholders ­ Internal Consumers ­ External
Profit is main
motive as
Employees - Internal Pushes up costs
determines and reduces
dividend Want high levels of revenue,
revenue and low costs therefore
lowers profit
a) Corporation tax -
Stakeholders groups will
Pressure Groups ­
b) Ensure
through External
regulation and
Companies Competition Companies have to be seen
fined if found Commission to be environmentally
to be colluding that market friendly
operates fairly
Suppliers ­ External
Poor quality
Prevent consumer products
being exploited Want to be paid on time
otherwise disrupts cash
flow…read more

Slide 3

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Occurs when the firm
producers at lowest point Price paid by consumer is
of the average cost curve equal to cost of producing
last unit of output
Productive efficiency
Allocative efficiency
Price/AC = MC
Occurs when firms
produces at a point where
When it reinvests its profit for
Only possible if firm research and development,
Dynamic efficiency innovation and improvements
makes supernormal
profit in technology…read more

Slide 4

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Size of firms
No of firms in a market
Entry and exit
How the actions of one
Characteristics of
firm affect others
a market
Similarities of goods
and services in the
The degree of market
knowledge/info firms
have…read more

Slide 5

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Market Structures
Perfect Monopolistic Oligopoly ­
Monopoly ­
competition competition 4/5 firms
1 sole
­ 100% ­ imperfect dominate the
competitive competition market
100% of
-EU law 25%
of market
Market becoming less
Market becoming less
Increasing barriers of entry…read more

Slide 6

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Four-firm three-firm
concentration concentration
ratio of 81% of ratio of 71% of
market share market share
Concentration ratio refers
Ratios This would also
to the suggest less
proportion/percentage of competition and low
the market taken up by x contestability
number of firms
When there are very
few firms in the market
it is said to be highly
concentrated or there is
a high concentration
ratio…read more


Whitney Koranteng


Where is part 2??

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