EXCELLENT NOTES ON ECONOMICS BY SENATHON IPIA

Senathon Ipia Definition of Private Company A private company is a business owned by 2 to 50 shareholders and is a separate legal entity from its owners . That is, a private company would have a minimum of 2 shareholders but a maximum of 50 shareholders. A private company has its name ending with the word “Limited”, often abbreviated as “Ltd”. An example of a private company would be:  Senaipia Limited . Features/Characteristics of a Private Limited Company (i)  Must have a minimum of 2 shareholders and a maximum of 50 shareholders . (ii) It is a separate legal entity from its owners . (iii) Limited Liability : The liability of the shareholders (owners) is limited to the amount contributed as share capital, or unpaid amount for the company’s shares already subscribed to. And the debts of the business can only be paid from its assets  –  Not from the assets of its owners.  (iv) No sale of its shares to members of the public . That is, the shares of a private com...

By: SENATHON IPIA Meaning of Limited Liability Company ( Joint-Stock Company ) A limited liability company (joint-stock company) is a business that has shares as its units of ownership . OR A limited liability company (joint-stock company) is a business in which the equity capital is known as shares . Types of Limited Liability Company ( Joint-Stock Company ) There are 2 types of Joint-Stock Companies (or Limited Liability Companies), namely: 1. private joint-stock company, (or private limited liability company), (or simply, private company). 2. public joint-stock company, (or public limited liability company), (or simply, public company). Formation of a Limited Liability Company ( Joint-Stock Company ) Persons that carry out the processes of forming a company are referred to as promoters of the company. When the Corporate Affairs Commission (CAC) registers a company, the company is said to be incorporated. So, the CAC would issue Certificate of Incorporation to the promot...

By:  SENATHON IPIA Definition of Partnership A partnership is a business owned by 2 to 20 persons and may be a separate legal entity from its owners or not . Owners of a partnership business are referred to as partners . Note : Every partnership business has between 2 to 20 partners, except for partnership involving accountants in an accounting firm, or lawyers in a law firm – they are permitted to be more than 20 partners. Types of Partnership 1. General Partnership or Ordinary partnership : A partnership firm that is NOT a separate legal entity, so all the partners have unlimited personal liability for the debts of the business. The business CANNOT sue and be sued in its own name. And the personal property of the partners would be added or used to settle the business liabilities if the business assets are NOT adequate to settle the business liabilities. 2. Limited liability Partnership : A partnership firm that is a separate legal entity, so all the partners have limited pers...

By: SENATHON IPIA Definition of Sole Proprietorship A Sole Proprietorship is a business owned by one person and is NOT a separate legal entity from its owner. Another name for sole proprietorship is private enterprise . The owner of the business is referred to as sole proprietor or sole trader . Features/Characteristics of Sole Proprietorship 1. Sole ownership : One person owns the business. 2. Not a separate legal entity from its owner : In the eye of the law, the sole proprietor is the business; the business is the sole proprietor. 3. Unlimited personal liability : A sole proprietor has unlimited liability for the debts of the business. This means the personal property of the owner would be added to settle the business debts if the business assets are not adequate to settle the business debts. 4. Motive ( reason ) for the formation : To make profits 5. Sources of capital or finance : These are personal savings, gifts or borrowings, loans and ploughed-back profits. Advantages o...

By: SENATHON IPIA   Meaning of Business Business is providing goods and services in exchange for money . Meaning of Business Organization A business organization is an establishment (or an entity or a firm ) that provides goods or services or both to make profit . Profit making is the original purpose of business. Profit is made when money from selling goods/ services is more than money spent to provide the goods/services. Money from selling goods/services is referred to as revenue or income . Money spent to provide goods/services is referred to as cost . Cost is divided into expenditure and expense . Expenditure is cost incurred for which the benefit is long-term. Expense is cost incurred for which the benefit is used up immediately or within a short period. In Economics, another name for business organization is firm . In Accounting, another name for business organization is Business Entity . And in Law, a business organization is either a legal entity or not a legal enti...

         By: SENATHON IPIA Definition of Investment Investment is an economic activity of spending money now to make (or to earn ) money later . An investment would be classified as one of these: 1. business investment 2. portfolio investment 3. investment in property 4. investment in human capital 1. Business Investment Business investment is establishing and running (or managing ) a business organization to make money . The business organization could be: i. sole proprietorship ii. partnership business iii. limited liability company business iv. cooperative society business v. public enterprise business. The economic essence of business investment is to earn income called profit . Owner(s) of a business organization is (are) therefore business investor(s). 2. Portfolio Investment Portfolio investment is buying shares in a limited liability company and lending money for interest. (a) A buyer of shares in a limited liability company is said to hold share...

THEORIES OF POPULATION Two theories are mentioned – Malthusian Theory and Demographic Transition Theory. - Malthus’ Population Theory is a theory on overpopulation. - For Demographic Transition Theory, it links fertility and mortality rates to the level of development of a society. Malthusian Theory of Population Malthusian or Malthus’ Population Theory is a population theory by Reverend Thomas Robert Malthus, published in his book titled, “Essay on the Principle of Population” in 1798. Malthus proposed that: 1. population was growing at geometric progression (i.e. 2, 4, 8, 16, 32, 64, 128, 256, 512, 1,024), while food production was growing at arithmetic progression (i.e. 1, 2, 3, 4, 5, 6, 7, 8, etc) . Note: Food production is also referred to as 'means of subsistence 2.  Food production ( means of subsistence ) will NOT grow with population because of the law of diminishing returns  3.  If population remains unchecked, humans beings will double themselves every 25 yrs...

COMPARING POPULATION WITH AVAILABLE RESOURCES When the population of an area is compared with its available natural and man-made material resources, the result is one of the following: - underpopulation -optimum population - overpopulation Note: By natural resources we mean land and its mineral resources, whether liquid mineral like crude oil, or solid minerals like gold, silver, copper, diamond, etc. By man-made resources, we mean facilities and infrastructure, such as roads, electricity, hospitals, schools, etc. 1. Underpopulation Underpopulation is population that is too small for the available resources . Causes of Underpopulation (i)  Low birth rate vis- a-vis high death rate : When there are more deaths than births, population shrinks, and becomes too small for the available resources. (ii) Availability of abundant resources : Natural resources being too much compared with the population (iii)  High emigration vis- a-vis low immigration : More people are leaving the ar...