Professional Documents
Culture Documents
1. Contract Law
2. Agreement
3. Consideration
4. Capacity
5. Legality
6. Written Contracts
2. Business Cycles
3. Economic Indicators
5. Unemployment
6. Monetary Policy
1. Comparative Advantage
2. Trade Barriers
a. According to classical economics, individuals (as a whole) are best off under free
trade. However, governments often establish policies designed to interfere in the workings of the
marketplace (Protectionism)
Tariffs
Import quotas
Domestic content
rules
Voluntary export
restrictions
A trigger price
mechanism
Antidumping rules
Exchange controls
Export subsidies
Special tax benefits
3. Tax Rates
average tax rate the total tax liability/ the amount of taxable income
effective tax rate the total tax liability/ total economic income
(includes amounts that do not have tax consequences)
4. Direct vs. Indirect
Direct taxes imposed upon the taxpayer and paid directly to the government,( personal
income tax)
Indirect taxes levied against others and therefore only indirectly on the individual taxpayer,
(corporate income taxes)
5. Tax Credits
6. Incidence of Taxation
7. International Tax Considerations
a. Multinational corporations frequently derive income from several countries
b. To avoid double taxation: two or more countries may adopt treaties to coordinate or
synchronize the effects of their taxing statutes
c. some countries tax worldwide income (from whatever source derived) of a domestic
corporation. Double taxation is avoided by allowing a credit for income tax paid to foreign
countries or by treaty provisions
2. Economic Regulation
a. Such regulation usually affects prices and service to the public and is ordinarily industry-
specific.
3. Social Regulation
a. This type of regulation has broader objectives and more extensive effects (workplace and
product safety, pollution, and fair employment practices. It applies to most industries)
1) Social regulation has been criticized on the grounds that:
(a) is costly (b) contributes to overregulation
(c) may inhibit innovation (d) increases inflation
(e) may place a disproportionate burden on small entities, thereby having an anticompetitive
effect
(f) regulators are perceived to have little concern for the relation of marginal benefits and
marginal costs
4. Securities Law
a. One purpose is to provide complete and fair disclosure to potential investors in an
initial issuance of securities
Disclosure a filing with a government agency
Exemptions transactions by a person not an issuer, underwriter, or dealer
Civil liability parties associated with a filing that contains a misstatement or omission of a
material fact
Antifraud liability selling a security using a communication containing an untrue statement, or
an omission, of a material fact
b. Other purposes are to regulate trading of securities after initial issuance, provide
adequate information to investors, and prevent insiders from unfairly using nonpublic
information
5. Antitrust Law
a. Competition controls private economic power, increases output, and lowers prices.
It promotes the following:
c. Other antitrust laws may prohibit the acquisition of shares or assets of another entity if
the effect may be to substantially lessen competition or to create a monopoly
1) The following are other actions that may be prohibited by antitrust laws:
a) Tying or tie-in sales Sales in which a buyer must take other products to buy the first product
b) Exclusive dealing a requirement by the seller that a buyer not deal with the seller’s
competitors
c) Price discrimination Sellers may not be allowed to grant, and buyers may not induce,
unfair discounts and other preferences. However, price discrimination
may be justified by cost savings or the need to meet competition
2) Interlocking directorates also could be prohibited even if the entities ceased to be
competitors
6. Consumer Protection
a. A government agency may help to maintain the safety of drugs, food, cosmetics, etc.,
and also may enforce laws requiring the labeling of hazardous substances.
1) New drugs may be required to be thoroughly tested before they are marketed.
But the premarket review is usually based upon research supplied by the manufacturers
b. Other consumer protection laws may
1. Prohibit deceptive packaging and labeling
2. Give consumers the right to obtain the information reported by credit agencies
3. Protect the public from unreasonable risk of injury from consumer products. They may
emphasize safety standards for new products
4. Prohibit discrimination in providing credit a) Provide consumers with rights in contesting
billing errors
b) Prohibit mailing of unsolicited credit cards
c) Limit a consumer’s liability for unauthorized
use of lost or stolen credit cards.
5. Regulate written warranties on consumer products
6. Prohibit abuses of consumers’ rights by collection agencies
7. Require disclosure of the terms and conditions of consumer credit
7. Environmental Protection
a. An agency may be created to centralize environmental control functions of the
national government.
(1) Air quality
(2) Water quality
(3) Hazardous waste