ECON Q1

entrepreneurship

the fourth factor of production

Say’s Law of Demand

states that production drives demand

entrepreneurship

a subset of labor or an example of human capital

profit

the return on entrepreneurship

start ups

entrepreneurs in IT related industries

entrepreneurship

largely entails putting up a business and assuming all risks

innovators, business owners

entrepreneurs are more like _________ than ________ ______

entrepreneurs

they focus on spotting a gap in the market or a business opportunity and think of ways to exploit it

visionaries

entrepreneurs are also considered as ____________

• creation of a new product or service in response to a consumer need

• improvement of an existing product

• process improvement

enumerate innovative strategies and entrepreneurs:

creation of a new product or service in response to a consumer need

an example of this innovation strategy is the innovation of power banks in answer to consumers’ need to stay connected and their heavy reliance on battery-operated gadgets while mobile

improvement of an existing product

an innovation strategy of entrepreneurs that keeps us with evolving consumer needs and preferences while a new market is created

process improvement

an innovation strategy of entrepreneurs that make a process more efficient

businesses

innovations can also target _________

1. disruptive inovation

2. revolutionary innovation

types of innovations:

disruptive innovation

products and ideas that break existing market structures

revolutionary innovation

a sudden, dramatic change that creates brand-new markets, highlighted by personal computers, artificial intelligence, and the steam engine

disruptive innovation

creates a new industry and challenges the status quo

FALSE

an additional feature of an existing product is considered as a disruptive innovation TRUE or FALSE?

Dept. of Trade & Industry (DTI)

governs entrepreneurs and businesses in the Philippines

10679

republic act No. _____ a.k.a. the Youth Entrepreneurship Act aims to support the development of young individuals 18 to 30 years old in the fields of finance and entrepreneurship

• sole proprietorship

• partnership

• corporation

types of business structures

single proprietorship

refers to a business having a single owner

partnership

refers to a business having more than a single owner

corporation

a business type where the business and owner are separate entities

conglomerate

refers to two or more corporations under the same ownership or parent company

1. register business name at DTI

2. secure Barangay clearance

3. get a business permit at the municipality

4. apply for tax identification number TIN; secure authority to print receipts; have ledgers and invoices stamped at the BIR

5. apply as a self employed owner at SSS

steps in registering a business

interest

cost for borrowing

grants and loans

may be awarded to qualified individuals under the Youth Entrepreneurship Act

1. internal financing (use one’s own funds)

2. external financing

two sources of financing

internal financing

personally bankroll an idea or use one’s own funds

external financing

refers to sourcing funds from third party investors

crowdsourcing

describes solicitation of funds and looking for services or ideas to people via the internet

rent

one of the highest costs that drive down operating income

minimum wage

the least required amount payed to workers as per the law

taxes

must be settled once a business is in operation

local taxes

typically paid at the city or municipality of operation

capital gains tax

paid in the regional district office of BIR

Register, File, Pay (RFP)

simplified process for business owners

• percentage tax

• VAT (value added tax)

• capital gains tax

• income tax

most common business taxes paid by entrepreneurs

• percentage tax

paid by entities that are exempt from tax with gross annual sales not exceeding a limit prescribed by the BIR

• VAT (value added tax)

a tax on sale, lease, and importation of goods and services and is subjected to additional guidelines

capital gains tax

imposed on the sales of capital assets such as real estate properties and stocks

income tax

most common tax filed by employed and self employed individuals or those who derive their income from business or professional practices

product market

Characterized by the exchange of goods and services ices

businesses

provide products that cater to the needs and wants of the customers

households

receive income in return for labor they supply

1. degree of competition

2. number of firms

3. bargaining power of consumers

4. barrier to entry

what are the different market structures

degree of competition

driven by the number of competing firms in the industry

number of firms

pertains to the actual number of competitors in the market

degree of competition

the number of firms is directly proportional to the ______ __ ___________

bargaining power of consumers

ability of consumers to influence market prices

barrier to entry

refers to the ease with which new firms can penetrate the industry

high setup costs

a high barrier to entry is characterized by ____ ______ _____ that requires entrants to have a huge amount of initial investment

economies of scale

the concept of producing in large quantity to spread the cost per unit

exclusivity of resource

another factor that contributes to high barrier entry could be something like copyright laws that protect a new technology, discouraging competitors from setting up business.

1. perfect competition

2. monopolistic competition

3. oligopoly

4. monopoly

types of competition:

perfect competition

characterized by many firms selling homogenous/identical goods and many buyers who have access to the good

perfect competition

has no or minimal barriers to entry

low switching costs

implies that consumers have high bargaining power, consumers influence the price

monopolistic competition

closer to what occurs in reality

monopolistic competition

has many sellers but they typically have less capability and are smaller in size

oligopoly

characterized by having only a few players in the industry

oligopoly

has high barrier to entry

monopoly

a market structure has a single player that controls the market

monopoly

extremely high barriers to entry

perfect competition

degree of competition: high

number of firms: many

bargaining power of consumers: high

barrier to entry: none

monopolistic competition

degree of competition: high

number of firms: many

bargaining power of consumers: high

barrier to entry: none

oligopoly

degree of competition: none

number of firms: one

bargaining power of consumers: none

barrier to entry: high

monopoly

degree of competition: none

number of firms: one

bargaining power of consumers: none

barrier to entry: high

macroeconomic goal, real GDP

economic growth is a _____________ ____ that is measured by ____ ___

Philippine labor market

an application of supply and demand

labor

a factor of production that earns factor income through wages

households

provides the labor required to manufacture goods or provide services

business

compensates laborers by paying wages

wages

influences the quantity demanded and supplied in the labor market

labor force

total number of people identified as employed and unemployed

employed

a term used to represent individuals who have job

unemployed

refers to people who are presently searching/temporarily laid off but are waiting to be called back for a job, and applicants who are about to start a new job

underemployed

workers who are better skilled than what their current jobs require

underemployment

a mismatch in skills and capabilities or over qualification

population growth

increase in the total number of human beings in the country

census

official collection of population information

labor supply

a increase in population potentially increases the _____ ______

labor force/working age population multiplied by 100

labor participation rate formula

labor force participation rate

approximates the percentage of the population that is actually apart of the labor pool

unemployed/labor force multiplied by 100

unemployment rate formula

unemployment rate

approximates the % of the individuals that don’t have jobs

1. frictional employment

2. structural employment

3. cyclical unemployment

4. seasonal unemployment

four types of unemployment:

1. frictional employment

temporary unemployment that is a result of people being in between jobs or being in transition

structural unemployment

an unemployment that results from technology changes and upgrades that require specialized skills

cyclical unemployment

caused by the upturn and downturn in the business cycle

seasonal unemployment

happens in industries with peak and lean seasons

factor income

it is what factors of production earn

wages

what a worker gets as compensation for hours of labor

salary

aggregate amount received

minimum wage

the least possible amount firms must pay their employees as mandated by the country’s labor laws

negatively correlated

wages and profits of a firm are..

equilibrium

labor market is in ___________ at the prevailing minimum wage rate and quantity of labor