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Economics IGCSEPDF 67
118 pagesrevision 46932
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Definitions
Firm(Producer): An organisation that
employs factors of production to produce
goods and services.
Profit: Total Revenue minus Total Costs
(TR - TC). The reward to the entrepreneur
for taking risks.
Revenue (Total Revenue): The income a
firm receives from selling its goods and
services (Price * times Quantity).
Cost (Total Cost): All the expenses
incurred by a firm in producing its goods
and services.
Sole Trader (Sole Proprietor): A business
owned and controlled by one person, who
takes all the profit but bears unlimited
liability.
Partnership: A business owned and
controlled by two or more people, who
share the profits but also bear unlimited
liability.
Notes: Objectives of Firms
●
Private Limited Company (Ltd): A business
owned by shareholders whose shares are
not traded publicly. Owners have limited
liability.
Public Limited Company (Plc): A large
business where shares are bought and sold
publicly on a stock exchange. Owners have
limited liability.
Unlimited Liability: The legal status where
the personal assets of the business
owner(s) can be taken to pay off the firm's
debts.
Limited Liability: The legal status where
the personal assets of the shareholders are
protected from the firm's debts; the most
they can lose is the value of their shares.
ProfitMaximisation: Thetraditional
and primary objective. Firms aim to
produce at the level of output where