ECONOMICS, TAXATION, AND LAND
THAT TIME BECAUSE OF HIS BOOK
REFORM
CHAPTER 1
SCARCITY
 A COMMODITY OR SERVICE BEING IN SHORT
SUPPLY, RELATIVE TO ITS DEMAND (KAPUR,
1997)
ECONOMICS
 SCIENCE THAT DEALS WITH THE MANAGEMENT
OF SCARCE RESOURCES
 STUDY OF THE PROBLEM OF USING AVAILABLE
ECONOMIC RESOURCES AS EFFICIENTLY AS
POSSIBLE SO AS TO ATTAIN THE MAXIMUM
FULFILLMENT OF SOCIETY’S UNLIMITED
DEMAND FOR GOODS AND SERVICES
 ORIGINATED FROM “OIKOS” MEANING
HOUSEHOLD, AND “NOMOS” MEANING
SYSTEM OR MANAGEMENT
CETERIS PARIBUS
 ALL OTHER THINGS HELD CONSTANT OR ALL
ELSE EQUAL
CLASSICAL ECONOMICS
 ADAM SMITH
o FATHER OF ECONOMICS
o ANALYSIS OF THE RELATIONSHIP BETWEEN
CONSUMERS AND PRODUCERS THROUGH
DEMAND AND SUPPLY
 WEALTH OF THE NATIONS
o BOOK OF SMITH PUBLISHED IN 1776
o KNOWN AS “BIBLE OF ECONOMICS”
 DAVID RICARDO
o DEVELOPED THE BASIC ANALYSIS OF THE
POLITICAL ECONOMY OR THE IMPORTANCE
OF A STATE’S ROLE IN ITS NATIONAL
ECONOMY.
NEOCLASSICAL ECONOMICS
 LEON WALRAS
o INTRODUCED THE GENERAL ECONOMIC
SYSTEM
o DEVELOPED THE ANALYSIS OF EQUILIBRIUM
IN SEVERAL MARKETS
 ALFRED MARSHALL
o BECAME MOST INFLUENTIAL ECONOMIST
PRINCIPLES IN ECONOMICS
o DEVELOPED THE ANALYSIS OF EQUILIBRIUM
OF A PARTICULAR MARKET AND THE
CONCEPT OF “MARGINALISM”
 JOHN MAYNARD KEYNES
o ENGLISH ECONOMIST WHO OFFERED AN
EXPLANATION OF MASS UNEMPLOYMENT
AND SUGGESTIONS FOR GOVERNMENT
POLICY TO CURE UNEPMPLOYMENT
o AUTHOR OF “THE GENERAL THEORY OF
EMPLOYMENT, INTEREST AND MONEY
(1936)
NON-WALRASIAN ECONOMICS
 JOHN HICKS
o RECOGNIZED FOR HIS ANALYSIS OF THE IS-
LM (INVESTMENT-SAVING – MONETARY)
MODEL
NEW CLASSICAL ECONOMICS
 HIGHLIGHTED THE IMPORTANCE OF
ADHERENCE TO NATIONAL EXPECTATIONS
HYPOTHESIS AND ANALYSIS, WHICH INCLUDED
VARIOUS ECONOMIC PHENOMENA IN
FORMULATING DIFFERENT KINDS OF STUDIES
AND NEW THEORIES IN ECONOMICS.
POSITIVE AND NORMATIVE ECONOMICS
 POSITIVE ECONOMICS
o AN ECONOMIC ANALYSIS THAT CONSIDERS
ECONOMIC CONDITIONS “AS THEY ARE” OR
CONSIDERS ECONOMICS “AS IT IS”
o SIMPLY ANSWERS THE QUESTION “WHAT
IS”
 NORMATIVE ECONOMICS
o ECONOMIC ANALYSIS WHICH JUDGES
ECONOMIC CONDITIONS “AS IT SHOULD
BE”
FOUR BASIC ECONOMIC QUESTIONS
 WHAT TO PRODUCE?
 HOW TO PRODUCE?
 HOW MUCH TO PRODUCE?
 FOR WHOM TO PRODUCE?
RELATIONSHIP OF ECONOMICS TO OTHER SCIENCES
 BUSINESS MANAGEMENT
  HISTORY CONSUMPTION EXPENDITURE, AND
 FINANCE GENERAL PRICE LEVEL OF COMMODITIES,
 PHYSICS GOVERNMENT SPENDING INFLATION,
 SOCIOLOGY RECESSION, EMPLOYMENT, AND MONEY
 PSYCHOLOGY SUPPLY.

IMPORTANCE OF STUDYING ECONOMICS OPPORTUNITY COST

 TO UNDERSTAND THE SOCIETY  REFERS TO THE FOREGONE VALUE OF TH NEXT
 TO UNDERSTAND GLOBAL AFFAIRS BEST ALTERNATIVE.
 TO BE AN INFORMED VOTER
FACTORS OF PRODUCTION
3 E’s IN ECONOMICS  LAND
 EFFICIENCY  LABOR
 EQUITY  CAPITAL
 EFFECTIVENESS  ENTREPRENEURSHIP

IMPORTANT ECONOMIC TERMS BASIC DECISION PROBLEMS

 WEALTH  CONSUMPTION
o ANYTHING THAT HAS FUNCTIONAL VALUE  PRODUCTION
 CONSUMPTION  DISTRIBUTION
o DIRECT UTILIZATION OR USAGE OF THE  GROWTH OVER TIME
AVAILABLE GOODS AND SERVICES BY THE
BUYER OR THE CONSUMER SECTOR. TYPES OF ECONOMIC SYSTEMS
 PRODUCTION  TRADITIONAL ECONOMY
o FORMATION BY FIRMS OF AN OUTPUT  COMMAND ECONOMY
(PRODUCES OR SERVICES)  MARKET ECONOMY
 EXCHANGE  SOCIALISM
o PROCESS OF TRADING GOODS AND/OR  MIXED ECONOMY
SERVICES FOR MONEY AND/OR ITS
EQUIVALENT CHAPTER 2
 DISTRIBUTION
o PROCESS OF ALLOCATING OR MARKET
APPORTIONING SCARCE RESOURCES TO BE  WHERE BUYERS AND SELLERS MEET
UTILIZED BY THE HOUSEHOLD, AND THE
REST OF THE WORLD. DEMAND
 PERTAINS TO THE QUANTITY OF A GOOD OR
BRANCHES OF ECONOMICS SERVICE THAT PEOPLE ARE READY TO BUY AT
 MICROECONOMICS GIVEN PROCES WITHIN A GIVEN TIME PERIOD,
o DEALS WITH THE INDIVIDUAL DECISIONS OF WHEN OTHER FACTORS BESIDES PRICE ARE
UNITS OF THE ECONOMY – FIRMS AND HELD CONSTANT.
HOUSEHOLDS, AND HOW THEIR CHOICES  DEMAND THEREFORE IMPLIES THREE THINGS:
DETERMINE RELATIVE PRICES OF GOODS o DESIRE TO POSSESS A THING;
AND FACTORS OF PRODUCTION. o THE ABILITY TO PAY FOR IT OR MEANS OF
 MACROECONOMICS PURCHASING IT; AND
o STUDIES THE RELATIONSHIP AMONG o WILLINGNESS IN UTILIZING IT.
BROAD ECONOMIC AGGREGATES LIKE LAW OF DEMAND
NATIONAL INCOME, NATIONAL OUTPUT,  PRICE VARIES INVERSLY AS THE DEMANDED
MONEY SUPPLY, BANK DEPOSITS, TOTAL QUANTITY
VOLUMES OF SAVINGS, INVESTMENT,
DEMAND SCHEDULE VARIABLES WHICH DETERMINE QUANTITY
 TABLE THAT SHOWS THE RELATIONSHIP OF SUPPLIED.
PRICES AND THE SPECIFIC QUANTITIES
DEMANDED AT EACH OF THESE PRICES. CHANGE IN QUANTITY SUPPLIED
DEMAND CURVE  IF THE MOVEMENT IS ALONG THE SAME SUPPLY
 GRAPHICAL REPRESENTATION SHOWING THE CURVE
RELATIONSHIP BETWEEN PRICE AND CHANGE IN SUPPLY
QUANTITIES DEMANDED PER TIME PERIOD.  WHEN THE SUPPLY CURVE SHIFTS RIGHTWARD
DEMAND FUNCTION OR LEFTWARD.
 SHOWS THE RELATIONSHIP BETWEEN DEMAND
FOR A COMMODITY AND THE FACTORS THAT FORCES THAT CAUSE THE SUPPLY CURVE TO CHANGE
INFLUENCE THIS DEMAND.  OPTIMIZATION IN THE USE OF FACTORS OF
PRODUCTION
CHANGE IN QUANTITY DEMANDED  TECHNOLOGICAL CHANGE
 THERE IS A CHANGE IF THE MOVEMENT IS  FUTURE EXPECTATIONS
ALONG THE SAME DEMAND CURVE  NUMBER OF SELLERS
CHANGE IN DEMAND  WEATHER CONDITIONS
 IF THE ENTIRE DEMAND CURVE SHIFTS TO THE  GOVERNMENT POLICY
RIGHT SIDE RESULTING TO AN INCREASE IN
DEMAND. MARKET EQUILIBRIUM
 THE MEETING SUPPLY AND DEMAND
FORCES THAT CAUSE THE DEMAND CURVE TO CHANGE EQUILIBRIUM
 TASTE OR PREFERENCES  A BALANCE THAT EXISTS WHEN QUANTITY
 CHANGING INCOMES DEMANDED EQUALS QUANTITY SUPPLIED
 OCCASIONAL OR SEASONAL PRODUCTS EQUILIBRIUM MARKET PRICE
 POPULATION CHANGE  PRICE AGREED BY THE SELLER TO OFFER ITS
 SUBSTITUTE GOODS GOOD OR SERVICE FOR SALE AND FOR THE
 EXPECTATIONS OF FUTURE PRICES BUYER TO PAY FOR IT.

SUPPLY MARKET DISEQUILIBRIUM

 QUANTITY OF GOODS OR SERVICES THAT FIRMS  SURPLUS
ARE READY AND WILLING TO SELL AT A GIVEN o A CONDITION IN THE MARKET WHERE THE
PRICE WITHIN A PERIOD OF TIME, OTHER QUANTITY SUPPLIED IS MORE THE
FACTORS BEING HELD CONSTANT QUANTITY DEMANDED
LAW OF SUPPLY o THERE IS A DOWNWARD PRESSURE TO
 PRICE VARIES DIRECTLY AS TO QUANTITY PRICE
SUPPLY SCHEDULE  SHORTAGE
 SCHEDULE LISTING THE VARIOUS PRICES OF A o QUANTITY DEMANDED IS HIGHER THAN
PRODUCT AND THE SPECIFIC QUANTITIES SUPPLIED.
SUPPLIED AT EACH OF THESE PRICES o THERE IS AN UPWARD PRESSURE TO PRICE
SUPPLY CURVE
 GRAPHICAL REPRESENTATION SHOWING THE PRICE CONTROLS
RELATIONSHIP BETWEEN THE PRICE OF THE  FLOOR PRICE
PRODUCT OR FACTOR OF PRODUCTION AND o LEGAL MINIMUM PRICE IMPOSED BY THE
THE QUANTITY SUPPLIED PER TIME PERIOD. GOVERNMENT
SUPPLY FUNCTION  PRICE CEILING
 FORM OF MATHEMATICAL NOTATION THAT o LEGAL MAXIMUM PRICE IMPOSED BY THE
LINKS THE DEPENDENT VARIABLE, QUANTITY GOVERNMENT.
SUPPLIED, WITH VARIOUS INDEPENDENT
CHAPTER 3
ELASTICITY OF DEMAND
 A MEASURE OF THE DEGREE OF
RESPONSIVENESS OF QUANTITY DEMANDED OF
A PRODUCT TO A GIVEN CHANGE IN ONE OF
THE INDEPENDENT VARIABLES WHICH AFFECT
DEMAND FOR THAT PRODUCT.
 CLASSIFICATION:
o PRICE ELASTICITY OF DEMAND
 RESPONSIVENESS OF CONSUMERS’
DEMAND TO CHANGE IN PRICE OF THE
GOOD SOLD
o INCOME ELASTICITY OF DEMAND
 RESPONSIVENESS OF CONSUMERS’
DEMAND TO CHANGE IN THEIR INCOME
o CROSS ELASTICITY OF DEMAND
 CHANGES IN PRICE OF OTHER RELATED
GOODS
INTERPRETATION OF THE ELASTICITY COEFFICIENT
 INELASTIC
o IF CONSUMERS WILL PAY ALMOST ANY
PRICE FOR THE PRODUCT
 ELASTIC
o IF CONSUMERS WILL ONLY PAY A CERTAIN
PRICE, OR A NARROW RANGE OF PRICES,
FOR THE PRODUCT
ELASTICITY OF SUPPLY
 REFERS TO THE REACTION OR RESPONSE OF
THE SELLERS OR PRODUCERS TO PRICE
CHANGES OF GOODS SOLD.
PRICE ELASTIC
 IF A CHANGE IN PRICE RESULTS IN A MORE
THAN PROPORTIONESS CHANGE IN QUANTITY
SUPPLIED
PRICE INELASTIC
 IF A CHANGE IN PRICE PRODUCES A LESS THAN
PROPORTIONATE CHANGE IN THE QUANTITY
SUPPLIED
CHAPTER 4
CONSUMER
 ONE WHO DEMANDS GOODS AND SERVICES
GOODS
 ANYTHING THAT PROVIDES SATISFACTION TO
THE NEEDS, WANTS AND DESIRES OF THE
CONSUMER.
SERVICES
 ANY INTANGIBLE ECONOMIC ACTIVITIES THAT
LIKEWISE CONTRIBUTE DIRECTLY OR
INDIRECTLY TO THE SATISFACTION OF HUMAN
WANTS.
TANGIBLE GOODS
 CONSUMER GOODS
o YIELD SATISFACTION DIRECTLY TO ANY
CONSUMER.
 ESSENTIAL OR NECESSITY GOODS
o GOODS THAT SATISFY THE BASIC NEEDS OF
MAN; NECESSARY IN OUR DAILY EXISTENCE
AS HUMAN BEINGS
 LUXURY GOODS
o ARE THOSE WHICH MEN MAY DO
WITHOUT, BUT WHICH ARE USED TO
CONTRIBUTE TO HIS COMFORT AND WELL
BEING.
 ECONOMIC GOOD
o BOTH USEFUL AND SCARCE
 FREE GOOD
o A GOOD THAT IS SO ABUNDANT THAT
THERE IS ENOUGH OF IT TO SATISFY
EVERYONE’S NEEDS WITHOUT ANYBODY
PAYING FOR IT.
PREFERENCES
 CHOICES MADE BY US CONSUMERS AS TO
WHICH PRODUCTS OR SERVICES TO CONSUME.
MASLOW’S HIERARCHY OF NEEDS
- IDENTIFIES THE BASIC PRIORITIES OF EVERY
CONSUMER.
 PHYSIOLOGICAL NEEDS
o BASIC NEEDS FOR SUSTAINING HUMAN LIFE
ITSELF.
 SAFETY NEEDS
o NEEDS TO BE FREE OF PHYSICAL DANGER
AND THE FEAR OF LOSING ONES WORK,
PROPERTY, FOOD OR SHELTER
 SOCIAL NEEDS
o COVER THE VALUE OF BELONGINGNESS
 ESTEEM NEEDS
o EXPLAIN THE IMPORTANCE OF SELF-
ESTEEM, RECOGNITION, STATUS OF AN
 INDIVIDUAL AND THE GENERAL
ACCEPTANCE OF THE SOCIETY TO AN
INDIVIDUAL
 SELF-ACTUALIZATION NEEDS
o WORTH OF A PERSON’S SELF-
DEVELOPMENT, GROWTH AND
REALIZATION AND ACHIEVEMENT.
UTILITY THEORY
 UTILITY REFERS TO THE SATISFACTION OR
PLEASURE THAT AN INDIVIDUAL OR CONSUMER
GETS FROM THE CONSUMPTION OF A GOOD OR
SERVICE THAT PURCHASES.
MARGINAL UTILITY
 ADDITIONAL SATISFACTION THAT AN
INDIVIDUAL DERIVES FROM CONSUMING AN
EXTRA UNIT OF A GOOD OR SERVICE.
TOTAL UTILITY
 TOTAL SATISFACTION THAT A CONSUMER
DERIVES FROM THE CONSUMPTION OF A GIVEN
QUANTITY OF A GOOD OR SERVICE IN
PARTICULAR TIME GOOD
GRAPHICAL ILLUSTRATION
 TOTAL UTILITY CURVE
o CONVEX CURVE
 MARGINAL UTILITY
o CONCAVE CURVE
CONSUMER SURPLUS
 MEASURE OF THE WELFARE WE GAIN FROM
THE CONSUMPTION OF GOODS AND SERVICES
 MEASURE OF THE BENEFITS THAT WE DERIVE
FROM THE EXCHANGE OF GOODS.
 DIFFERENCE BETWEEN THE TOTAL AMOUNT
THAT WE ARE WILLING AND ABLE TO PAY FOR A
GOOD OR SERVICE AND THE TOTAL AMOUNT
THAT WE ACTUALLY PAY FOR THAT GOOD OR
SERVICE
CHAPTER 5
PRODUCTION
 REFERS TO ANY ECONOMIC ACTIVITY WHICH
COMBINES THE FOUR FACTORS OF
PRODUCTION TO FORM AN OUTPUT WHICH
WILL GIVE DIRECT SATISFACTION TO THE
CONSUMER.
 PROCESS OF CONVERTING INPUTS TO OUTPUTS
TECHNOLOGY
 BODY OF KNOWLEDGE APPLIED TO HOW
GOODS ARE PRODUCED.
 PRODUCTION PROCESS EMPLOYED BY FIRMS IN
CREATING GOODS AND SERVICES.
CATEGORIES:
 LABOR INTENSIVE TECHNOLOGY
o UTILIZES MORE LABOR RESOURCES THAN
CAPITAL RESOURCES
 CAPITAL INTENSIVE TECHNOLOGY
o UTILIZES MORE CAPITAL RESOURCES THAN
LABOR RESOURCES IN PRODUCTION
PROCESS
SHORT RUN
 A PERIOD OF TIME, SO SHORT THAT THERE IS AT
LEAST ONE FIXED INPUT THEREFORE CHANGES
IN THE OUTPUT MUST BE ACCOMPLISHED
EXCLUSIVELY BY CHANGES IN THE USE OF
VARIABLE INPUTS.
LONG RUN
 A PERIOD OF TIME, SO LONG THAT ALL INPUTS
ARE CONSIDERED VARIABLE.
PRODUCTION FUNCTION
 FUNCTIONAL RELATIONSHIP BETWEEN
QUANTITIES OF INPUTS USED IN PRODUCTION
AND OUTPUTS TO BE USED.
TOTAL PRODUCT
 REFERS TO THE TOTAL OUTPUT PRODUCED
AFTER UTILIZING THE FIXED AND VARIABLE
INPUTS IN THE PRODUCTION PROCESS
MARGINAL PRODUCT
 EXTRA OUTPUT PRODUCED BY 1 ADDITIONAL
UNIT OF THAT OUTPUT WHILE OTHER INPUTS
ARE HELD CONSTANT.
LAW OF DIMINISHING RETURNS
 WE WILL GET LESS AND LESS EXTRA OUTPUT
WHEN WE ADD AMOUNT OF AN INPUT WHILE
HOLDING OTHER INPUTS FIXED.
 THE MARGINAL PRODUCT OF EACH UNIT OF
INPUT WILL DECLINE AS THE AMOUNT OF THAT
INPUT INCREASES, HOLDING ALL OTHER INPUTS
CONSTANT.
RETURN TO SCALE CASES
 CONSTANT RETURNS TO SCALE
o A CHANGE IN ALL INPUTS LEADS TO A
PROPORTIONAL CHANGE IN OUTPUT
  INCREASING RETURNS TO SCALE
o AN INCREASE IN ALL INPUTS LEADS TO A
MORE-THAN-PROPORTIONAL INCREASE IN
THE LEVEL OF OUTPUT
 DECREASING RETURNS TO SCALE
o A BALANCED INCREASE IN ALL INPUTS
LEADS TO A LESS THAN PROPORTIONAL
INCREASE IN TOTAL OUTPUT
THEORY OF COST
 REFERS TO ALL EXPENSES ACQUIRED DURING
THE ECONOMIC ACTIVITY OR THE PRODUCTION
OF GOODS AND SERVICES.
 SALES – COSTS = PROFIT
TOTAL REVENUE – TOTAL COSTS = PROFIT
EXPLICIT COST
 PAYMENTS TO NON-OWNERS OF A FIRM FOR
THEIR RESOURCES
IMPLICIT COST
 OPPORTUNITY COSTS OF USING REOURCES
OWNED BY THE FIRM.
FIXED COST
 OVERHEAD OR SUPPLEMENTARY COST
 ARE THOSE EXPENSES WHICH ARE SPENT FOR
THE USE OF FIXED FACTORS OF PRODUCTION.
 SOMETIMES CALLED SUNK COSTS
VARIABLE COST
 PRIME OR OPERATING COSTS
 EXPENSES WHICH CHANGE AS A CONSEQUENCE
OF A CHANGE IN QUANTITY OF OUTPUT
PRODUCED.
TOTAL FIXED COST
 CONSISTS OF COST THAT DO NOT VARY AS
OUTPUT AND THAT MUST BE PAID EVEN IF
OUTPUT IS ZERO.
TOTAL VARIABLE COST
 CONSISTS OF COSTS THAT ARE ZERO WHEN
OUTPUT IS ZERO AND VARY AS OUTPUT
INCREASES.
TOTAL COST
 SUM OF TOTAL FIXED COST AND TOTAL
VARIABLE COST
 TC = TVC + TFC
AVERAGE FIXED COST
 OUTPUT INCREASES, AFC FALLS CONTINUOUSLY
 AFC = FC / Q
AVERAGE VARIABLE COST
 AVC = VC / Q
AVERAGE TOTAL COST
 ATC = TC / Q
 ATC = AFC + AVC
MARGINAL COST
 COST OF PRODUCING ONE ADDITIONAL UNIT
OF OUTPUT
 MC = TC / Q
 MC = TVC / Q
PROFIT
 DIFFERENCE THAT ARISES WHEN A FIRM’S
TOTAL REVENUE IS GREATER THAN OF ITS
TOTAL COST.
 PROFIT = TOTAL REVENUE – TOTAL COST
ECONOMIC PROFIT CAN BE VIEWED IN TERMS OF:
a. THE RETURN ACCRUING TO ENTERPRISE
OWNERS AFTER THE PAYMENT OF ALL EXPLICIT
COSTS AND IMPLICIT COSTS
b. RESIDUAL RETURN TO THE OWNER(S) OF A
FIRM FOR PROVIDING CAPITAL AND FOR RISK-
BEARING
c. REWARD TO ENTREPRENEURS FOR
ORGANIZING PRODUCTIVE ACTIVITY, FOR
INNOVATING NEW PRODUCTS, ETC., AND FOR
RISK-TAKING
d. PRIME MOVER OF A PRIVATE ENTERPRISE
COMPANY SERVING TO ALLOCATE RESOURCES
BETWEEN COMPETING END USERS IN LINE
WITH CONSUMER DEMANDS
CHAPTER 6
SINGLE OR SOLE PROPRIETORSHIP
 FORM OF BUSINESS OWNED BY A SINGLE
PERSON, KNOWN AS THE PROPRIETOR.
ORGANIZING A SOLE PROPRIETORSHIP
 REGISTER THE BUSINESS NAME (DTI)
 PAY THE MUNICIPAL LICENSES TO THE LGU
 APPLY FOR VAT OR NON-VAT MEMBER
 REGISTER WITH THE BIR THE BOOKS OF
ACCOUNTS AND THE BUSINESS FORMS TO BE
USED.
ADVANTAGES OF SOLE PROPRIETORSHIP
 IT IS EASY TO ORGANIZE
 ITS ORGANIZATION AND OPERATION ONLY
INVOLVES FEW BUSINESS REQUIREMENTS
 THE SINGLE PROPRIETOR IS THE BOSS
 FINANCIAL OPERATIONS ARE NOT
COMPLICATED
  THE OWNER ACQUIRES ALL THE PROFITS.
DISADVANTAGES OF SOLE PROPRIETORSHIP
 LIMITED ABILITY TO RAISE CAPITAL
 THE SOLE PROPRIETOR HAS UNLIMITED
LIABILITY
 LIMITED ABILITY TO EXPAND
 BUSINESS IS ENTIRELY A RESPONSIBILITY OF THE
OWNER
PARTNERSHIP
 A BUSINESS ORGANIZATION THAT IS AN
ASSOCIATION OF AT LEAST TWO OR MORE
PERSONS WHO AGREE TO PLACE MONEY,
PROPERTY OR INDUSTRY IN A COMMON FUND
WITH THE AIM OF SHARING THE PROFITS
AMONG THEMSELVES.
ORGANIZING A PARTNERSHIP
 REGISTER THE BUSINESS NAME (DTI)
 HAVE THE PARTNERSHIP AGREEMENT
NOTARIZED AND REGISTERED WITH THE SEC.
 OBTAIN A TIN FOR THE PARTNERSHIP FROM
THE BIR
 OBTAIN PERTINENT MUNICIPAL LICENSES FROM
LGU
 OBTAIN THE VAT OR NON-VAT ACCOUNT
NUMBER FROM THE BIR
 REGISTER WITH THE BIR THE BOOKS OF
ACCOUNTS AND THE BUSINESS FORMS TO BE
USED.
CONTENTS OF ARTICLES OF CO-PARTNERSHIP
 NAME OF THE PARTNERSHIP
 NAMES OF THE PARTNERS
 PLACE OF BUSINESS
 EFFECTIVE DATE OF THE PARTNERSHIP
 NATURE OF BUSINESS
 INVESTMENT OF EACH PARTNER AND
CORRESPONDING CAPITAL CREDIT
 DURATION OF THE CONTRACT
 RIGHTS, POWERS, AND DUTIES OF THE
PARTNERS
 ACCOUNTING PERIOD
 MANNER OF DIVIDING PROFITS AND LOSSES
 LIABILITIES OF THE PARTNERS FROM
PARTNERSHIP DEBTS
 COMPENSATION FOR SERVICES OFFERED BY
PARTNERS
 TREATMENT OF PARTNER’S ADDITIONAL
INVESTMENTS AND WITHDRAWALS
 PROCEDURES FOR SETTLEMENT OF PARTNER’S
INTEREST UPON DISSOLUTION OF PARTNERSHIP
 PROVISION FOR SETTLEMENT OF DISPUTES
TYPES OF PARTNERS
 BASED ON THEIR CONTRIBUTION
o CAPITALIST PARTNER
 ONE THAT PROVIDES ASSETS
o INDUSTRIAL PARTNER
 ONE THAT SWEARS TO GIVE SERVICES
OR LABOR TO THE OPERATION OF THE
BUSINESS
o CAPITALIST-INDUSTRIAL PARTNER
 ONE THAT PLEDGES MONEY AND
PROPERTY AS THE STARTING CAPITAL
OF THE BUSINESS
 BASED ON THEIR LIABILITY FOR PARTNERSHIP
DEBTS
o GENERAL PARTNER
 ONE WHO IS LIABLE FOR PARTNERSHIP
PROBLEMS, PARTICULARLY THE DEBTS
OF THE BUSINESS
o LIMITED PARTNER
 ONE WHOSE LIABILITY FOR
PARTNERSHIP PROBLEMS IS LIMITED
ADVANTAGES OF A PARTNERSHIP
 EASY TO FORM
 FLEXIBILITY OF OPERATIONS
 EFFICIENCY IN OPERATIONS
 PARTNERS ARE EXPECTED TO HAVE GREAT
INTEREST IN THE OPERATION OF THE
PARTNERSHIP
 POSSIBILITY OF BIGGER RESOURCES.
DISADVANTAGES OF A PARTNERSHIP
 PARTNERS HAVE UNLIMITED LIABILITY FOR
PARTNERSHIP DEBTS
 IT HAS A LIMITED LIFE OR IT LACKS STABILITY
 LIMITED ABILITY TO RAISE CAPITAL
 CONFLICTS AND QUARRELS BETWEEN/AMONG
PARTNERS
CORPORATION
 (BP Blg. 68) AN ARTIFICIAL BEING CREATED BY
OPERATION OF LAW HAVING THE RIGHT OF
SUCCESSION AND THE POWERS, ATTRIBUTES
AND PROPERTIES EXPRESSLY AUTHORIZED BY
LAW OR INCIDENT TO ITS EXISTENCE.
 A FORM OF BUSINESS ORGANIZATION IN
WHICH THE OWNERS HAVE AN UNDIVIDED
 OWNERSHIP SHARE IN THE ASSETS OF THE
CORPORATION UPON ITS DISSOLUTION
ORGANIZING A CORPORATION
 VERIFICATION OF CORPORATE NAME WITH SEC
 DRAFTING AND EXECUTION OF THE ARTICLES
OF INCORPORATION
 DEPOSIT OF CASH RECEIVED FOR SUBSCRIBED
SHARES OF STOCKS IN A BANKING INSTITUTION
IN THE NAME OF THE TEMPORARY TREASURER,
IN TRUST FOR AND TO THE CREDIT OF THE
CORPORATION
 FILING THE ARTICLES OF INCORPORATION
TOGETHER WITH THE FOLLOWING:
o TREASURER’S AFFIDAVIT
o STATEMENT OF ASSETS AND LIABILITIES OF
THE PROPOSED CORPORATION
o AUTHORITY TO VERIFY BANK DEPOSITS
o CERTIFICATE OF DEPOSIT OF CASH PAID
FOR SUBSCRIPTION
o PERSONAL INFORMATION SHEET OF THE
INCORPORATORS
o COMMITMENT TO CHANGE CORPORATE
NAME IF IT IS FOUND SIMILAR TO ANOTHER
CORPORATE NAME
 PAYMENT OF FILING AND PUBLICATION FEES
 ISSUANCE OF SEC OF THE CERTIFICATE OF
INCORPORATION
 REGISTRATION OF THE CORPORATE NAME
WITH THE DTI
 OBTAINING MUNICIPAL LICENSES FROM THE
LGU
 OBTAIN THE VAT OR NON-VAT ACCOUNT
NUMBER FROM THE BIR
 REGISTER WITH THE BIR THE BOOKS OF
ACCOUNTS AND THE BUSINESS FORMS TO BE
USED.
CONTENTS OF ARTICLES OF INCORPORTATION
(SECTION 14 OF CORPORATION CODE, BP 68)
 NAME OF THE CORPORATION
 THE SPECIFIC PURPOSE OR PURPOSES FOR
WHICH THE CORPORATION IS BEING LOCATED
 THE TERM FOR WHICH THE CORPORATION IS
TO EXIST
 THE NAMES, NATIONALITIES AND RESIDENCES
OF THE INCORPORATORS.
 THE NUMBER OF DIRECTORS OR TRUSTEES,
WHUCH SHALL NOT BE LESS THAN FIVE (5) NOR
MORE THAN FIFTEEN (15)
 THE NAMES, NATIONALITIES AND RESIDENCES
OF THE DIRECTORS OR TRUSTEES.
 IF IT IS A STOCK CORPORATION, THE AMOUNT
OF ITS AUTHORIZED CAPITAL STOCK IN LAWFUL
MONEY OF THE PHILIPPINES, THE NUMBER OF
SHARES INTO WHICH IT IS DIVIDED. TOGETHER
WITH ITS VALUES ON PAR
 IF IT IS A NON-STOCK CORPORATION, THE
AMOUNT OF ITS CAPITAL, THE NAMES,
NATIONALITIES AND RESIDENCES OF THE
CONTRIBUTORS AND THE AMOUNT
CONTRIBUTED BY EACH.
 SUCH OTHER MATTERS AS ARE NOT
INCONSISTENT WITH LAW AND WHICH THE
INCORPORATORS MAY DEEM NECESSARY AND
CONVENIENT.
BY-LAWS
 RULES OF ACTION FOR THE INTERNAL
GOVERNMENT OF A CORPORATION AND FOR
THE GOVERNMENT OF ITS OFFICERS,
STOCKHOLDERS AND MEMBERS.
RIGHTS OF STOCKHOLDERS
 RIGHT TO ATTEND AND VOTE IN PERSON OR BY
PROXY AT STOCKHOLDERS
 RIGHT TO DECEIVE DIVIDENDS WHEN
DECLARED
 RIGHT INSPECT CORPORATE BOOKS AND
RECORDS AND TO RECEIVE FINANCIAL REPORT
OF THE CORPORATION’S OPERATIONS
 RIGHT TO PRE-EMPTION IN THE ISSUE OF
SHARES
 RIGHT TO ELECT AND REMOVE DIRECTORS
 RIGHT TO APPROVE CERTAIN CORPORATE ACTS
 RIGHT TO ISSUANCE OF CERTIFICATE OF STOCK
OR OTHER EVIDENCE OF STOCK OWNERSHIP
AND BE REGISTERED AS SHAREHOLDERS.
 RIGHT TO TRANSFER OF STOCK ON THE
CORPORATE BOOKS.
 RIGHT TO ADOPT AND AMEND OR CANCEL THE
BY-LAWS OR ADOPT NEW BY-LAWS
 RIGHT TO COMPEL THE CALLING OF MEETING
OF STOCKHOLDERS WHEN FOR ANY CAUSE
THERE IS NO PERSON AUTHORIZED TO CALL A
MEETING
 RIGHT TO ENTER INTO A VOTING TRUST
AGREEMENT.
 RIGHT TO RECOVER STOCK UNLAWFULLY SOLD
FOR DELINQUENCY.
  RIGHT TO BRING INDIVIDUAL AND
REPRESENTATIVE OR DERIVATIVE SUITS
 RIGHT TO DEMAND PAYMENT OF THE VALUE
OF HIS SHARES AND WITHDRAW FROM THE
CORPORATION IN CERTAIN CASES.
 RIGHT TO HAVE THE CORPORATION
VOLUNTARILY DISSOLVED.
ADVANTAGES OF CORPORATION
 IT HAS A LEGAL CAPACITY
 IT HAS CONTINUED AND MORE OR LESS
PERMANENT EXISTENCE
 MANAGEMENT IS CENTRALIZED
 IT HAS THE MOST EFFICIENT MANAGEMENT
 SHAREHOLDERS HAVE LIMITED QUALITY
 SHAREHOLDERS’ FREEDOM
 ABILITY TO RAISE MORE CAPITAL
DISADVANTAGE OF CORPORATION
 COMPLICATED TO MAINTAIN AND NOT EASY TO
ORGANIZE
 GOVERNMENTAL INTERVENTION
 SUBJECT TO HIGHER TAX
 IT HAS LIMITED POWERS
 ABUSES OF CORPORATION OFFICIALS
 SOME CORPORATION ARE ENGAGED IN
QUESTIONABLE ACTIVITIES
 THERE IS A VERY IMPERSONAL OR FORMAL
RELATIONSHIP BETWEEN THE OFFICERS AND
EMPLOYEES OF A CORPORATION
CLASSIFICATION OF A CORPORATION
 BASED ON NATURE OF ITS CAPITAL
o STOCK CORPORATION
o NON-STOCK CORPORATION
 BASED ON PURPOSE
o PUBLIC CORPORATION
o PRIVATE CORPORATION
 BASED ON RELATION TO OTHER CORPORATION
o PARENT CORPORATION
o SUBSIDIARY CORPORATION
 BASED ON SITUS OF INCORPORATION
o DOMESTIC CORPORATION
o FOREIGN CORPORATION
 BASED ON WHETHER THEY WANT TO OPEN IN
PUBLIC OR NOT
o CLOSE CORPORATION
o OPEN CORPORATION
VOTING IN A CORPORATION
 STOCK CORPORATION
o CUMULATIVE VOTING
 NON-STOCK CORPORATION
o EVERY MEMBER MAY CAST AS MANY VOTES
AS THERE ARE TRUSTEES TO BE ELECTED
CATEGORIES OF SHARES OF STOCKS
 COMMON STOCK
 PREFERRED STOCK
 CLASS A SHARES
 CLASS B SHARES
 PAR VALUE SHARES
 NO PAR VALUE SHARES
 FOUNDERS’ SHARES
DIVIDENDS
 DISTRIBUTED PROFITS OF THE CORPORATION
KINDS OF DIVIDENDS
 CASH
 PROPERTY
 STOCK
 SCRIP
 BOND
 LIQUIDATING
COOPERATIVES
 (PD 175) ONLY ORGANIZATIONS COMPOSED
PRIMARILY OF SMALL PRODUCERS AND
CONSUMERS WHO VOLUNTARILY JOIN
TOGETHER TO FORM BUSINESS ENTERPRISES
WHICH THEY THEMSELVES OWN, CONTROL
AND PATRONIZE.
PRINCIPLES OF COOPERATIVES
 OPEN AND VOLUNTARY MEMBERSHIP
 DEMOCRATIC CONTROL
 LIMITED INTEREST ON CAPITAL
 DIVISION OF NET SURPLUS
 COOPERATIVE EDUCATION
 COOPERATION AMONG COOPERATIVES
OBJECTIVES OF A COOPERATIVE
 TO PROVIDE GOODS AND SERVICES TO ITS
MEMBERS
 TO ATTAIN INCREASED INCOME AND SAVINGS,
INVESTMENTS, PRODUCTIVITY
 PURCHASING POWER
 PROMOTE AMONG THEM EQUITABLE
DISTRIBUTION OF NET SURPLUS THROUGH
MAXIMUM UTILIZATION OF ECONOMIES OF
SCALE, COST-SHARING, AND RISK-SHARING
WITHOUT,
SIMILARITIES BETWEEN COOPERATIVE AND o ONE SELLER AND ONLY ONE BUYER
CORPORATION  BILATERAL OLIGOPOLY
 PRIVATELY OWNED AND MANAGED o SIGNIFICANT DEGREE OF SELLER AND
 DEPENDENT ON BUSINESS EFFICIENCY TO BUYER CONCENTRATION
SURVIVE IN A COMPETITIVE MARKET  DUOPONY
 ACTIVITIES AND OPERATIONS ARE REGULATED o TWO BUYERS BUT MANY SELLERS
BY THE GOVERNMENT  DUOPOLY
 ENJOYED A REASONABLE DEGREE OF o THERE ARE ONLY TWO SUPPLIERS
ECONOMIC FREEDOM  MONOPSONY
DIFFERENCES BETWEEN COOPERATIVE AND o SINGLE BUYER CONFRONTS MANY SMALL
CORPORATION SUPPLIERS.
 COOPERATIVE
o PRIMARILY ORGANIZED FOR SERVICE
o OPEN AND VOLUNTARY MEMBERSHIP
o DEMOCRATIC MANAGEMENT
o ONE MAN, ONE VOTE
o SAVINGS OR NET PROFITS ARE REFUNDED
TO THE MEMBERS
 CORPORATION
o PURPOSE MAINLY FOR PROFIT
o RESTRICTED MEMBERSHIP
o ONE SHARE, ONE VOTE / MORE SHARES,
MORE VOTES
o PROFITS ARE DISTRIBUTED TO
STOCKHOLDERS ON THE BASIS OF THE
NUMBER OF SHARES

CHAPTER 7

TYPES OF MARKET STRUCTURES

 PERFECT COMPETITION
o LARGE NUMBER OF SMALL FIRMS
o HOMOGENOUS PRODUCT
o VERY EASY ENTRY AND EXIT
 MONOPOLY
o SINGLE SELLER OR PRODUCER
o UNIQUE PRODUCT
o IMPOSSIBLE ENTRY
 MONOPOLISTIC COMPETITION
o MANY SMALL SELLERS
o DIFFERENTIATED PRODUCT
o EASY ENTRY AND EXIT
 OLIGOPOLY
o FEW SELLERS
o HOMOGENOUS OR DIFFERENTIATED
PRODUCTS
o DIFFICULT ENTRY
SPECIAL TYPES OF MARKET STRUCTURE
 BILATERAL MONOPOLY