Small Business Finance

Topics: Corporation, Federal Reserve System, Limited liability company Pages: 8 (2384 words) Published: May 5, 2013
BUS C170- Small Business Finance
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1. What is finance?
Finance is the management of banks for example the interest rates on a particular loan. It includes the management of investments such as the distribution of dividends. Finance also includes but is not limited to, the management of money for example the inflation and deflation of currency. Information used from: 2. What is a market? Name five types of markets in which you participate. What markets trade economic resources? A market is a consensus between many people that one’s good/service/currency can be traded for another’s goods/service or currency.

I participate in the financial market by budgeting my own income; retail/wholesale/commodities market by using currency to purchase goods and services; stock market by purchasing shares from 5 different mutual funds. My current career is security / law enforcement which would be supplying a service for the government which would be a labor market. Information used from:

3. Compare marginal revenue, marginal cost, and marginal revenue product.
Marginal revenue is extra income made when selling an additional product like a car manufacturer selling 1 extra car, marginal cost would be how much the manufacturer would spend on making the additional car including parts and labor and marginal revenue product would be the extra income with the subtraction from the marginal cost generated from parts/labor because the work created the car to sell.

Information used from:; 4. Distinguish between economic and financial capital.
Economic capital is a product that is produced and can be sold; financial capital is available funds to pay for real capital. Financial capital can be partial ownership of a company through stocks or invested contracts. Information used from: and

5. What is opportunity cost?
Opportunity cost is the gain and loss between two or more choices. What are you sacrificing in choosing choice A and not choice B? What are the gains? These and more questions are asked when determining opportunity cost. Information used from: 6. What makes up gross income?

Gross income is the sum of all income at the end of a period.
Information used from: 7. Compare progressive, regressive, and proportional taxes. Give at least one example of each type of tax. Progressive is when income is taxed at a higher percentage because the income amount has increased, an example would be when family one makes $50,000 and is taxed at 15% and family B makes $100,000 and is taxed at 20%. In regressive taxes the income is taxed more when it decreases instead of increases. An example would be when family A makes $50,000 and is taxed at 20% and family B making $100,000 pays 15% tax. Unlike progressive and regressive tax, proportional tax does not depend on the amount of income made to dictate what percentage will be owed; instead it has one percentage we will say 20% and it will not matter if the income of family A is $50,000 or family B with $100,000, they will both pay the same percentage. In all cases the rich will pay more, even with the regressive (depending on the percentage) it’s just depends on how much you want the rich or poor to pay.

Information is from: 8. What is the law of supply?
When the price is raised on a product then the distributor/retailer will try to keep that item in...
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