Application of Demand and Supply (Part 2)

• Investment refers to an asset or item that is purchased with the hope that it will generate income or appreciate in the future
• Investment refers to the capital expenditure on physical assets such as plants, machinery, and equipment
• Expected return on the investment – Entrepreneurs and capital owners need the return on their investment, covering risk, and earning a reward.
• Business confidence – This considerably influences the investment decisions of entrepreneurs. Being uncertain of the future can postpone such decisions until confidence returns
• General future expectations – Investment appraisals and eventual business decision-making are influenced by expectations such as an economic downturn
• Corporation tax – A business pays tax on its profit. Thus, a reduction in tax increases its profit
• Level of savings – Corporate and household savings offer a flow of funds into the financial sector, which are available for investment.
• Changes in household income – Small changes in household income can trigger changes in investments.
• Level of economic activity – There is an increase in the production level when the gross domestic product (GDP) is high, boosting demand for capital and encouraging higher investments
• Technological change – The demand for capital increases to keep up with developments or technological changes
• Public policy – The demand for capital can significantly be affected by public policies granting incentives to firms
• – Interest rates are the cost of using or borrowing money
• Loanable funds – These are the amount of money given by a lender to a borrower
• Return on capital – Interest is the return earned by the capital as the input in the production process.
• Fixed-income investments (FIIs) – For investors that are risk averse, these are generally safe investment options, providing fixed periodic sources of income over a certain period
• 1.       Variable-income investments (VIIs) – There is no full guarantee for returns strongly influenced by the financial markets' behavior and economic situations. Suitable for risk-tolerant individuals as invested money or resources may not be fully recovered.
• Rent refers to the payment for using land and other natural or economic resources in fixed supply
• Economic rent is the positive difference between the actual payment made to the owner for an economic resource for its exclusivity or scarcity and the owner's expected payment level
• A minimum wage is considered an example of a floor price
• Taxation is the act of levying a tax so that the sovereign, through its law-making body, can raise income to cover the necessary expenses of the government
• Tax is a levy imposed by the government on income, wealth, and capital gains of people or businesses to fund government spending
• Direct taxes are taxes levied by the government on income and wealth from households and businesses to raise government revenue and act as a fiscal policy instrument
• Income tax (individual and corporate) is a tax on all yearly profits arising from property, profession, trades, or offices or as a tax on a person's income
• Indirect taxes are taxes levied by the government on products and services to raise revenue and to act as an instrument of fiscal policy
• Value-added tax is a business tax imposed and collected from the seller in the course of trade or business on every sale of properties
• Excise tax is a tax on the production, sale, or consumption of a commodity in a country. It applies to goods manufactured or produced in the Philippines
• proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases.
• regressive tax is a tax imposed in such a manner that the tax rate decreases
• progressive tax is a tax in which the tax rate increases as the taxable base amount increases.
• Value-added tax (VAT) – There is a collected 12% VAT for almost all kinds of product sales, services, and leases, remitted to the Bureau of Internal Revenue (BIR)
• Salary and wage taxes – Withholding taxes on compensation refers to the tax withheld from income payments to individuals arising from an employer-employee relationship
• Amusement taxes – Movie houses, basketball games, carnivals, amusement businesses, and even concerts of singers and actors are subject to such taxes
• Excise taxes – Businesses such as manufacturers of alcohol, tobacco, and petroleum products, importers of automobiles or jewelry, and those involved in mining must pay such taxes
• Import taxes – Businesses pay customs duties for importing products as part of their raw materials and certain industrial machinery and equipment.
• Individual income taxes – If your business is a sole proprietorship or a partnership, your income as the proprietor or partner is considered 'personal income
• Corporate income taxes – A corporation is considered a separate tax-paying entity, paying its income taxes.
• Real property tax – It is a tax levied by the local government on properties
• Estate tax is a tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers
• Inheritance tax is a tax you pay when you receive money or property from the estate of a deceased person.
• The tax burden on an average worker is up to 35% depending on his or her income range