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• Lesson 4 Market Structure By: Paulo Timothy DR. Aguila Applied Economics
• Market structure


  Refers to the competitive environment in which buyers and sellers operates
• Types of competition


  • Perfect Competition
  • Imperfect Competition
  • Monopoly
  • Oligopoly
  • Monopolistic Competition
• Perfect Competition


  • Is a hypothetical market structure in which there are very many firms, each of which represents an infinitesimal share of the market
• Imperfect Competition


  • Exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical perfect competition
• Monopoly


  • Is a firm who is the sole seller of its product, and where there are no close substitutes
• Oligopoly


  • A market structure with few firms and barriers to entry. There is often a high level of competition between firms, as each firm makes decisions on prices, quantities and advertising to maximize profits
• Monopolistic Competition


  • Is a type of market structure where many companies are present in an industry and they produce similar but differentiated products
• Entrepreneurship


  The ability to know what products and services are needed by people and to be able to provide these things at the right time, at the right place and to the right people and at the right price
• Entrepreneur


  The person who does entrepreneurship, organizes their own business, assumes all the risk and returns on their investment, decides on what, how and how much of a good or service will be provided and monitors and controls all the activities of the business
• Contemporary issues affecting Filipino entrepreneurs


  • Investment and interest rate
  • Rentals
  • Minimum wage
  • Taxes
• Investment


  An asset or item acquired with the goal of generating income, including the purchase of new plants, new equipment, new homes and net increases in inventories
• Types of investment


  • Long-term investment
  • Short-term investment
• Interest rate


  The amount a lender charges for the use of assets, expressed as a percentage of the principal, usually noted on an annual basis as the annual percentage rate (APR)
• Rentals


  Starting entrepreneurs usually do not have their own space to start their business, so they rent spaces on a mall or stalls to start the operation of the business
• Minimum wage


  The law that establishes a minimum amount that an employer can pay a worker for one day of labor
• Principles of taxation


  • Benefits-received tax principle
  • Ability-to-pay tax principle
• Entrepreneur


  A person who sets up a business or businesses, taking on financial risks in the hope of profit
• Main types of national internal revenue taxes


  • Income
  • Indirect (value-added and percentage taxes)
  • Excise
  • Documentary stamp taxes
• Being an entrepreneur is not an easy task
• The global COVID-19 pandemic has affected millions of people, causing a severe downturn of the global economy, and entrepreneurs are one of those people mostly affected by this global pandemic
• Entrepreneurship


  • Entails uncertainty and risk
  • Especially in times of pandemic or COVID-19
• Business


  An organization or enterprising entity engaged in commercial, industrial or professional activities. Business can be for profit or non-profit organization.
• Business is like a gamble
• It takes a brave heart to invest resources with no guarantee of return
• Types of business organizations


  • Single Proprietorship
  • Partnership
  • Corporation
• This module discusses contemporary issues affecting Filipino entrepreneurs
• Investment


  Building up the capital stock for more future production and consumption
• When the entrepreneur does not have enough investment, they will resort to borrowings or borrow from financial institutions like banks
• Single Proprietorship


  • Simplest way to set up a business
  • Owned by a single individual who is singly responsible for running the business and is accountable for all debts and obligations
  • Sole proprietor enjoys exclusive control and decision-making as well as gets all the profits earned but also shoulders all losses and has unlimited liability
• Interest rate


  The amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed
• Partnership


  • Agreement in which two or more persons combine their resources in a business with a view to making profit
  • Profits are equally divided among the partners according to the terms of agreement
• Types of Partnership


  • General partnership
  • Limited partnership
• General partnership


  • All owners share the management of the business and each is personally responsible for and must assume the consequences of the actions of the other partners
• Limited partnership


  • Some members are general partners who control and manage the business and may be entitled to a greater share of the profit while other partners are limited and contribute only capital, take no part in control or management and are liable for debts to a specific extent only
• Corporation


  • A legal entity that is separate and distinct from its owners
  • No shareholder is personally liable for the debts, obligations, or act of the corporation
  • Directors and officers can bear liable for their involvement with the Corporation
  • Can exist for a life of 50 years, renewable for another 50 years
  • Owners have limited liabilities but corporations are burdened by heavy taxes
• Business size based on total assets


  • Micro business: PhP 1,500,000 or below
  • Small business: PhP 1,500,001 - PhP 15,000,000
  • Medium business: PhP 15,000,001 - PhP 60,000,000
  • Large-scale business: PhP 60,000,001 or above
• Requirements for any form of business organization


  • The business must be registered with the appropriate government agencies
  • For sole proprietorship and partnerships, 100% must be owned and capitalized by Filipinos
  • For corporation, at least 60% of the outstanding capital stocks must be owned by Filipino citizens
• The choice of which form of business organization may be a personal preference of the owner based on his business plan, resources that he has and the scope of operations
• Principles of creating a business


  • Purpose
  • Vision
  • Big ideas
  • Scalability
  • Growth
  • Systems
  • Sustainability
  • Profitability
  • Autonomy
  • Standards