• A large number of buyers and sellers all engaged in the purchase and sale of exactly the same commodity.

• Identical commodity offered for sale.

• Each buyer or seller has perfect knowledge of market prices and quantities.

• There are no barriers to entry or exit.

Monopolistic Competition: Many Unique Products. Economists describe a market with many sellers providing similar but not identical products as monopolistic competition.

The process of creating uniqueness in products is known as product differentiation. So, monopolistic competition is characterized by:

• a large number of firms producing similar but not identical products;

• product differentiation;

• some restrictions of information about market prices and quantities of goods;

• a relatively easy entry to the market.

• Oligopoly: A Few Sellers. Oligopoly is a term applied to markets dominated by a few (roughly three to five) large firms, each with substantial market control.

• Oligopolies exist because it is difficult for competing firms to enter the market.

Monopoly: One Seller. A monopoly is defined as a single firm producing unique products for which there are no close substitutes. A monopolist has the market power or complete control over the market price.

Business organizations

There are three major kinds of business organizations: the sole proprietorship², the partnership³ and the corporation⁴.

The most common form of business organization is the sole proprietorship — a business owned and run by one person. The main advantage of a sole proprietorship is that it is the easiest form of business to start and run.

Sole proprietors own all the profits of their enterprises and are free to make whatever changes they please. The major disadvantage of a sole proprietorship is the unlimited liability⁸ that each proprietor faces. A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. A business corporation is an institution established for the purpose of making profit. It is operated by individuals. People, who would like to form a corporation, must file for permission¹ in the state where the business will have its headquarters. There are several advantages of the corporate form of ownership. The major advantage is the ability to acquire greater financial resources than other forms of ownership. The next advantage is that the corporation attracts a large amount of capital and can invest it in plants, equipment and research. Corporations face some major disadvantages. It is difficult and expensive to organize a corporation.

Money

People often say things like "he makes a lot of money". Despite this common understanding of the term, money is not income, and money is not wealth.

At different periods of time and in different parts of the world a variety of commodities served as money.

Nowadays the money people are most familiar with is currency that people use almost daily.

modern money should have the following characteristics:

Stability. The value of money should be more or less the same today as tomorrow.

Durability. Money has to have a reasonable life expectancy.

Portability. Modern money has to be small enough and light enough for people to carry.

Recognizability. Money should be easily recognized for what it is and hard to copy.

Uniformity. Equal denominations of money should have the same value.

Divisibility. One of the principal advantages of money is its ability to be divided into parts. In other words, it is easy to make change for a large denomination.

There are three functions of money: medium of exchange. a measure of value store of value. An extended period of rising prices is called inflation. A period in which prices are falling is called deflation.

Taxation

Taxes are the most important source of revenues for modern governments. Without taxes to finance its activities, governments could not exist. Governments use tax revenues to pay soldiers and police, to build roads and bridges, to control schools and hospitals, to provide food to the poor and medical care to the elderly.

There are

Consumption tax: a tax on certain goods, especially goods that people buy for pleasure or enjoyment rather than those people buy regularly in order to live

Excise tax (duty): a tax charged on certain goods and services produced and sold within the country, such as alcoholic drinks and tobacco products.

Income tax: a tax on the income earned by individuals and corporations.

Progressive tax: a tax that takes more money from people with higher incomes than from people with lower incomes.

Property tax: a tax based on the value of property owned by the taxpayer.

Proportional tax: a tax in which the amount of tax paid is proportional to the size of the taxable income.

Regressive tax: a tax that has less effect on the rich than on the poor.

Sales tax: a regressive tax added to the price of goods and services at the time they are sold.