8/13/2019 Aqs2143 - Economics Self Notes (2)

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TYPE OF COMPANIES

1. A company is a business organization.2. Liabilityrefers to something like responsibility.3. The Companies Act 1965 classifies companies based on:

The liabilityof members The public status The relationshipwith other companies The place of incorporation

4. Classification by the liability of members: Limited liability

o Limited by shareso Limited by guarantee

Unlimited company5. Private company

Member limit is 50 Restrict right to transfer share

6. Public company Does not necessarily a government company/body. People can have shares if the company is listed in the stock. Can seek listed status.

7. Group refers to corporations/companies that are related (they have holding subsidiaryrelationship among themselves).

Holding companyis the main company Subsidiary companyanak syarikat

8. A company is deemed to be holding to a subsidiary company when: When it controls the composition of the board of directors. When it controls half of the voting power of the subsidiary. When it holds more than half of the issued capital.

9. A foreign company is a company,corporation, society, association or other body incorporatedoutside Malaysia. A foreign company desiring to establish a place of business within Malaysia

must become registered.

10. There are three types of business firmsnamelyproprietorship, partnership and corporation.11. Proprietorship

Owned by an individual This individual possessesthe ownership right to the firms profit. Is also personally liable for the firms debts.

12. Partnership Unlimitedcompany Owned by two or more individuals Possessesownership right to the firms profit. Personally liable for the firms debts.

13. Corporation Limitedcompany Owned by shareholders Possessesownership right to the firms profit. Liability is limitedonly to their amount of investment in the firm.

8/13/2019 Aqs2143 - Economics Self Notes (2)

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MONOPOLY (THEORY OF A FIRMMARKET STRUCTURE)

1. In monopoly, the firm is the industry.2. They use the demand curve facing by the firm as the market demand curve.

P

Q

3. Total quantity supplied in the market is what the firm decides to produce.Total revenue

Units of output

4. An increase in output involves not just producing more and selling it, but also reducing theprice of its output to sell it.

5. Its marginal revenue curve shows - the change in total revenue as a firm moves along thesegment of the demand curve.

6. All firms practiceincrease output as long as marginal revenue is greater than marginal cost.7. Marginal revenue (MR) minus marginal cost (MC) equals to marginal profit (if its positive).8. Profit-maximising level of outputfor a monopolist is the one where MR=MC(intersection).9. No supply curve in monopoly. They set price and quantity.10.Amount of output supply depends on its marginal cost curve and its demand curve.11.Priceis determined based on the profit-max level curveand demand curve.12.ATC price = Cost

PML price = Revenue

Profit = PML priceATC price

D

{The usual demand curve is a

reflection of monopolys demand

curve.}