
Saturday, 30 January 2010
30-01-10

Thursday, 21 January 2010
21/01/10 x Osu!第6話
Monday, 18 January 2010
Economics -- Production in short run and long run
Production runs
Variable factors are inputs that the quantities vary when output changes.
Fixed factors are inputs that the quantities don’t vary when output changes.
The change of output can be classifies into temporary or persistent.
In temporary increase in demand, only factors like raw materials, electricity is used more. They’re variable factors that quantities changes with output. However some factors like factory premises are fixed factors and won’t change.
In a persistent increase in demand, the factory may employ more. Then all production factors have become variable factors.
Short run and long run is classified to the existence of fixed factors. Short run(SR) refers to the period that contain fixed factor where long run(LR) means no fixed factors over the period.
Input and output relationship in SR
- 1) Total product (TP) refers to the total amount of output over a time. (unit: unit/time)
- 2) Average product (AP) refers to the average output produced per unit of variable factor employed in the period. i.e., AP = TP / units of variable factor.
- 3) Marginal product (MP) is the change of total amount of output that results from adding an additional unit of variable factor in the period.
MP of the nth unit of a variable factor = TP of n units – TP of (n-1) units
The law of diminishing marginal returns states that when a variable factor is added continuously to a given quantity of fixed factors, the marginal return (product) will eventually decrease, ceteris paribus.
MP increases since specialization formed among the variable factors, but it decreases because fixed factors per that variable factor decreases so that they do not have enough fixed factors to use.
Variable cost refers to the cost of employing variable factors which changes with output.
Fixed cost refers to the cost of employing fixed factors which do not change with output.
Measurement of costs
- 1) Total cost (TC) = Total variable cost (TVC) + Total fixed cost (TFC).
- 2) Average cost (AC) = TC / Units of output. (unit: cost per unit)
- 3) Marginal cost (MC) refers to the change in total cost that results from producing an additional unit of output. i.e. MC of the nth unit of output = TC of n units – TC of (n-1) units
Note that when an extra cost only comes from variable factors, therefore:
MC of the nth unit of output = TVC of n units – TVC of (n-1) units
Now assume that the wage of labour is unique while labour is the only variable factor.
Considering MP = ΔQ/Δv.f = ΔQ/ΔL. and MC = ΔTC/ΔQ, where Q is the quantity of output and Δ refers to the change. Denote L as labour.
MC = ΔTC/ΔQ = ΔTVC/ΔQ = (wage*ΔL)/ ΔQ=(wage) ΔL//ΔQ = wage*MC-1
Therefore the marginal product is inversely proportional to the marginal product. When the marginal product is high, additional units of factor can help a lot and the marginal cost is lower.
In a long run, scale of production is enlarged by employing all factors in the same proportion. The result is classified into economies/diseconomies of scale. The curve of long run average cost (LRAC) is U-shaped when LRAC is at minimum; we call that scale as the optimal scale.
Economies of scale refer to the advantages associated with large scale production which lowers the LRAC.
Diseconomies of scale refer to the disadvantages associated with large scale production which raises the LRAC.
Possible sources of internal economies of scale:
- 1) Technical economies – they can buy larger machines and spread the cost into larger output, while machines can be fully utilized.
- 2) Managerial economics – specialization among managers and attracts more professionals to work for the firms increases the productivity.
- 3) Financial economies – raising funds at a lower cost and borrowing at a lower interest rate.
- 4) Purchasing economies – larger discount when buying inputs in bulk.
- 5) Marketing economies – spread the ad costs over a larger output.
- 6) Risk diversification economies – diversify products = diversify risks
- 7) Research and development (R&D) economies – can afford research and development.
Possible sources of external economies of scale:
- 1) More workers are attracted to the industry, employed and trained. Then costs of recruiting and training workers are reduced.
- 2) Cost of back-up, a transport and communication service is shared among the firms.
- 3) More firms ads their products implies more people will know that industry and this will lower the marketing costs.
Possible source of internal diseconomies of scale:
- 1) Managerial diseconomies – complex organizational structure delay decisions, block communication and weaken coordination.
- 2) Financial diseconomies -- risk of lending big sum of a firm is high → interest rate ↑
- 3) Purchasing diseconomies – higher demand of resources implies higher average costs.
- 4) Marketing diseconomies – local market may be saturated and exploring oversea markets raises the average cost.
Possible source of external diseconomies of scale:
- 1) Excessive expansion cause a drastic increase in demand for factor inputs, then the input prices like wages will be greatly increases.
- 2) Increasing concentration of business activities in a certain area causes traffic congestion and raises the transportation cost.
Economics -- Factors of production II
Entrepreneurship (human resources) is the human effort provided by an entrepreneur who is a owner of business. The factor return/income is called profit. They’re responsible to organize, manage and make (all major) decisions. For example, they raise funds, decide what to produce, how to produce, price and quality of products, etc. They’re responsible for bearing all risks of production, and unlike the passive roles in production, their income are not stipulated by contract so it’s return is uncertain.
Capital (producer goods) is man-made resources used by producers to help production. The factor income is called interest. They can be money or machines, etc. Note that some of them will be used up during production (e.g. fuels, money) but some of them can be used repeatedly (e.g. machines). Capital that can be used repeatedly is called fixed capital.
Features of capital:
- 1) They can replace other factors like labour since they’re man-made. Cost can be reduced or improve the productivity. E.g., ATM instead of tellers is cheaper and faster.
- 2) They can be forgone for more future consumption since when resources are used to produce to purchase capital, it can’t be consumed now, but when it’s used in production, increase in capital means the increase in productivity. Then future consumption of consumer goods can be increased in return.
Change in capital stock (refers to capital formation – capital depreciation)
- 1) Capital depreciation refers to the reduction of the value of capital caused by capital consumption (wear/tear) or capital obsolescence (out-dated)
- 2) Capital formation refers to the production or purchase of capital or investment. The two purpose are replace the depreciated capital to maintain productivity or to increase the production productivity in order to expand the production capacity. The resulting net increase in capital is called capital accumulation.
Land refers to the natural resources used in production. They must not be processed (human effort is not involves). The factor income is called rent. E.g., oil deposits and wildland.
Note that land that being processed is capital, but not land. (e.g. land created by reclamation)
- 1) It’s totally a gift from nature and no cost is (forgone) needed for its formation.
- 2) Supply of land can’t be increased artificially but can be increased by natural forces.
The current situation of Hong Kong
Hong Kong is well-known for its hard-working, adaptable and well-educated workforce, and the high efficiency and enterprising entrepreneurs.
It’s also well-known for the excellent man-made resources such as the transportation system and communication infrastructure as an international financial centre.
However Hong Kong is so small and it’s lack of natural resources. But it still has one of the best deep-water ports (Victoria Harbor) in the world.
Sunday, 17 January 2010
Osu! 第5話
「嗯~你又是誰呀?」 好動聽的聲音!現在的重點是我認識她而不是她認識我才對!我帶口吃地回應:「我,們交個朋,朋友……好嗎?」 女孩自言自語的說道:「啊,說實話我也不知道為甚麼我會被困在這裡來的嘛……好像是在一場戰鬥中,一陣閃光讓我昏過去,然後我就被困住了……原來,火可以把詛咒破掉啊……」 我的嘴巴似乎不受控制了:「我,們交個朋,朋友……好嗎?」 女孩不耐煩地揮手道:「好吧。不過先讓我看看你的實力……」
~失敗路線~
四處一片荒蕪,他們的戰鬥讓方圓一百米活生生的植物都給烤焦了。此時,勝負已分。我,跪在女孩的面前,痛苦地掙扎著。「哼,憑你這點實力就相認識我?還差很遠呢。」我再也撐不住,昏過去了。 醒來時,矇矓的視野中隱約可見fish哥和團長,眼中盡是責怪的眼神……這下完了……
Wednesday, 13 January 2010
Osu! 第4話
Monday, 11 January 2010
Osu 第3話
Sunday, 10 January 2010
Metals
Metals
The most abundant elements in the earth crust is O and Se while the most abundant metals are Al and Fe.
Extraction method
Exist as free element – Physical separation
When the metals are extremely unreactive, it exists as free element.
A mechanical separation is processed to separate metals (as free element) from rocks and sands. Water flows through the mixture, while the heavier metals sinks, lighter rocks and sands are washed away.
1) Gold
Characteristic: Attractive colour resists corrosion, extremely malleable and ductile
Use: Jewellery and coins
2) Silver
It can exist in oxide form (Argentite) or free element. 2Ag2O→4Ag+O2 under heating.
Characteristic: Attractive colour, resists corrosion, malleable, ductile and best conductor of electricity. Use: Jewellery and coins
Heating alone
3) Mercury – (Cinnabar)
2HgO→2Hg+O2 by heating alone. (HgS+O2→Mg+SO2)
It’s toxic, and used to make thermometer.
Carbon reduction
4) Copper – (Copper pyrite CuFeS2)
It becomes different oxides and sulphide when it’s exposed in air.
CuS+O2→Cu+SO2
Characteristic: very good conductor of heat and electricity, very malleable and ductile, strong, non-poisonous and resists corrosion.
Use: Electric wires and cooking utensils.
5) Lead – (Galena PbS) (toxic)
(Roasting in air) 2PbS+3O2→2PbO+2SO2, 2PbO+C→2Pb+CO2
6) Iron – (Haematite Fe2O3 Iron(III) oxide)
It’s extracted in a blast furnace. Limestone, coke, limestone are used.
Chain of reaction: (1) C+O2→CO2 (2)CaCO3→CaO+CO2 (3)C+CO2→2CO
(4)3CO+Fe2O3→2Fe+3CO2
Carbon monoxide is very reactive such that it have to be produced inside the blast furnace. It’s used to take away the oxygen in the iron ore quickly.
Iron(II) sulphide: 4FeS+7O2→2Fe2O3+4O2, 2Fe2O3+3C→4Fe+3CO2
Characteristic: Strong, malleable, ductile and cheap (abundant)
Use: Bridges, ships and gratings.
7) Zinc – (Zinc blende ZnS)
Roast in air: 2ZnS+3O2→2ZnO+2SO2, 2ZnO+C→2Zn+CO2
Electrolysis of molten ore
The ore is molten and put in a machine which positive graphite electrodes is placed up to attract the oxygen. The negative graphite electrode is placed down to attract the molten ore.
8) Aluminium – Bauxite
Characteristic: light but strong, resists corrosion (oxide protection)
Use: aeroplanes and window frames
9) Magnesium – Magnesite
10) Sodium is from rock salt (NaCl)
11) Potassium – Carnallite
Other important metals and their uses
12) Tin as coatings of other metals since it’s malleable, non-poisonous, resists corrosion and offers a clean adhesive surface for paints.
13) Titanium is used to make supersonic aircraft and space vehicles; it’s also used for too implants and replacement hip joints since it’s very light and strong, having a high M.P., resist corrosion, can be easily shaped and biocompatible (non-poisonous and not rejected by the body)
14) Tungsten is used to make light bulb filaments for the high M.P. which emits white light when it’s still at solid state.
The ease of extraction (reactivity) affects the year of discovery. Currently the resource of iron is the most abundant and lasting among metals. But since metals are non-renewable, limited with increasing demand, we should conserve them.
-Extraction of ores, uses lots of water, with emitting lots of SO2 and CO2
-The 4Rs: reduce, reuse, recycle and replace.
-Recycling of metals refers to melting down used and scrap metals, and use them again. Recycling metals saves more than a half of energy (Al 95%) while comparing to extracting them. The benefits include less metal resources and fuel can be reduced. Also less air pollutants are emitted. The public awareness of conservation can be raised. However, there’re some problems in recycling, including the difficulties to collect the waste metal, cost of transporting, cost of melting and purifying, as well as disposing waste in the process. They’re not cheap. Recycling industry is still seeking improvements.
Reactivity of metals refers to the note. It's ready for now)
Friday, 8 January 2010
Osu! 第二話
Thursday, 7 January 2010
Osu! <第1話> Beater
Tuesday, 5 January 2010
Chemistry notes - Planet Earth
Examples of resources in the Earth: coal, natural gas, metals, NaCl and limestone…
Matters are something that has mass.
Mixtures – 2+ pure substances which haven’t joint chemically
Pure substances:
Elements: Can’t be broken into anything simpler by chemical methods.
Compound: Composed of 2+ elements joined chemically together.
Some examples of compounds and their uses:
Ammonia ( NH3) – glass cleanser, fertilizer
Calcium carbonate ( CaCO3) – calcium supplement tablets
Sodium hydroxide ( NaOH) : drain cleanser
Mixture VS compound:
Mixed together in any proportion. VS In a fixed ratio.
No chemical change when it’s formed VS Energy is usually released when forming the compound (chemical change occurred)
Similar properties with the original substances that made up the mixture VS Can have very different chemical properties then the elements that it contains
Don’t have a sharp BP/MP (it varies) VS Have a definite/sharp/unique MP/BP
Can be separated by physical method VS Have to be separated through chemical method. (e.g. electrolysis)
Method of separation
1) Decantation
Let the residue sinks in the bottom of the beak and pour the decant away through the glass rod. It’s suitable for separating insoluble liquid from a liquid.
2) Filtration
Pour the mixture into a filter funnel with filter paper through the glass rod. Residue is in the beaker underneath and the filtrate left in the filter paper. It’s suitable for separating insoluble liquid from a liquid. (e.g. separate sand from sea water)
3) Evaporation.
Heat the mixture in a evaporating dish by Bunsen flame. When solution is evaporated, solid remains. It’s used to separate dissolved solid from a solution. (e.g. NaCl from Sea Water)
4) Crystallization
Method I: Heat the mixture, some solvent boils away, but hot solution can hold more solute. Cool it down and the solution can’t hold such solute, crystal formed.
Method II: Pour the mixture in a beaker with cover, let the solvent evaporate under room temperature, it will over-saturated and from crystals.
It’s used to separate dissolved solid from a solution. (e.g. from Water)
5) Distillation (evaporation + crystallization)
Evaporate the solution in a distillation flask, a tube with condenser receives the solution vapour and turn it into liquid, and collected by the conical flask. It’s suitable to separate dissolved solid from a solution.
6) Fractional distillation
Remove impurities such as dust, water vapour etc; liquefy air by compression-expansion cycle and pump into fractioning column. With temperature slowing increasing with height air of lower boiling point are extracted first.
It’s suitable to separate two miscible liquids.
7) Sublimation
Put the mixture in a beaker covered by a evaporating dish. Heat the beaker until it sublimes. Those sublimed gas will become solid again in the bottom of the dish.
It’s suitable to separate mixture of two solids which one of them can sublime.
Physical properties are something that can be measured without changing the chemical composition of the substance.
No new substances are formed during physical change.
Chemical properties describe the ability of a substance to form new substances.
One or more new substances is formed in chemical change. In another way, energy is absorbed or released.
Test for oxygen: (glowing splint test) Oxygen relights glowing splint.
Test for hydrogen: (burning splint test) Hydrogen gives a “pop” sound when burning.
Test for water: Water turns dry cobalt(II) chloride paper from blue to pink.
Test for some metals (flame test): If it’s not clean, dip it into conc. solution, heat it until no characteristic flame is shown. Dip the clean wire into (fresh) conc. solution (or dip it into conc. solution, heat it until no characteristic flame is shown.), then dip it into the solid sample power and heat it.
1) Sodium ion gives golden yellow flame.
2) Calcium ion gives brick-red flame.
3) Potassium ion gives lilac flame.
4) Copper ion gives bluish green flame.
Test for chloride: add (dilute) nitric acid followed by silver nitrate solution, gives white ppt (participate).
Four layers of Earth’s atmosphere: troposphere, stratosphere, mesosphere and ionosphere. Composition of atmosphere – 78% of , 21% of , 0.9% of noble gases, 0.03% of , variant amount of and some other gases.
Sea covers over 70% surface area of the Earth. It dissolved different salts. Most salts are brought by rivers. Composition of sea salt (3.5% of the sea water): about 68% of , 15% of , 11% of , 3% of and some other salt.
A solution forms when a substance (solute) dissolves in another (solvent). Dilute solution contains a very small amount of solute in given amount of solution. When solute increase, it becomes concentrated, and finally saturated. Saturated solution means it can’t dissolve anymore solute in a given temperature.
Electrolysis of water
2H2O -> 2H2 + O2
sea water -> Hydrogen + Chloride + Sodium Hydroxide
Particle theory of matter – all substances are made up by very small particles.
Limestone – calcium carbonate ( CaCO3)
1) Heat and limewater(calcium hydroxide)
Heating calcium carbonate gives calcium oxide (quick lime) and carbon dioxide:
CaCO3 -> CaO + CO2
Adding water to calcium oxide gives lime water (slaked lime in solution):
CaO+H2O -> Ca(OH)2
Test for carbon dioxide: turns lime water from colourless to milky:
Ca(OH)2+H2O -> CaCO3 + H2O
Excess carbon dioxide makes it becomes colourless again:
CaCO3+H2O+CO2->Ca(HCO3)2
2) Acid
Adding (dilute) hydrochloric acid gives calcium chloride, water and carbon dioxide:
CaCO3+2HCl->CaCl2+H2O+CO2
Use of limestone
1) Crushed limestone (CaCO3) – extraction of iron; construction material for road and buildings.
2) Powered limestone (CaCO3, grinded) – neutralize acidity of soil and sulphur dioxide in flue gas of power stations; making glass.
3) Quicklime (CaO) – making steel with Fe, neutralize acidity in soil; drying agent in industry.
4) Slaked lime (Ca(OH)2) – neutralize acidity in soil and lake affected by acid rain.
5) Cement (limestone heating with shale) – ingredients of concrete.
Formation of limestone cave
Solid rock broke down and changed into other materials by weathering, its surface is wearied away while the movement of products of weathering that changed their location is called erosion. Rainfalls becomes carbonic acid with carbon dioxide in air (H2O+CO2→H2CO3) (Note that the reaction can occur the inverse direction here) while carbonic acid dissolves the underground limestone deposits to form calcium hydrogencarbonate:
CaCO3+H2CO3→Ca(HCO3)2
(Ca(HCO3)2 is the main cause of hard water.)
The underground limestone is dissolved in this way over millions of years to form underground holes called limestone caves.
Formation of limestone
CaCO3 exists naturally in 3 forms: chalk, limestone and marble, depends on their hardness.
When sea animals die, their skeletons and shells (mainly contains CaCO3) sink into the mud at the bottom of the oceans. After many years layers built up and pressure from top layers changes the bottom layers to chalk. Earth movements such as earthquake may lift the layer to Earth’s surface. They changes to limestone and marble under. higher pressure and heat
Sorry for the chemical equation. >_>
Sunday, 3 January 2010
Factors of production - Labour
Factors of production
Labour (human resources) refers to the human effort both in mental and physical. The factor income/return of labour is called wage, to compensate labours’ production efforts
Quantity supplied of labour is in terms of working hours, so we have:
Quantity supplied of labour = number of workers x average working hours.
Labour supply describes quantities supplied of labour in different wage rate.
In Hong Kong, the size of labour force is the part of population aged 15 or above which is willing and available to work for wages. Size and working hours of the labour can be affected in many factors, such as migration, age distribution, holidays, maximum working hours, etc.
(Average) labour productivity measures average output per working hour per labour:
Labour productivity = total output / (no. of working hrs)(no. of workers)
It can be affected by health of workers, education and training (enhance intelligence of workers in training and develop their skills), mechanization and technological level, working environment, management (which affect their morale) and incentive to work.
Mobility is a signal for efficient use of a factor of production.
1) Occupational mobility -- willingness and ease of a factor changes its occupation.
Factors affecting occupational mobility:
i) Retraining programmes – help workers to acquire essential skills for new jobs so that occupational mobility increases.
ii) Market obstacles – labour unions and professional associations may set demanding entrance requirement to take up certain occupations -- decrease the occupational mobility.
iii) Remuneration and working conditions – worse condition raises the incentive to change the job, and the occupational mobility increases.
iv) Recruitment magazines, websites and employment agencies provide information about the availability of different job and assist workers to find new jobs. As a result, occupational mobility increases
2) Geographical mobility -- willingness and ease of a factor changes their living place.
Factors affecting geographical mobility:
i) Immigration and emigration policies limit their geographical mobility. For example, domestic worker can’t be imported from mainland.
ii) Economic, political and social conditions change labour forces’ preference to settle in other areas and affect the geographical mobility.
iii) Transport network and transport cost – well network Increase the geographical mobility but it’s reduced by high transportation cost in Hong Kong. The Transport Support Scheme introduced by the government in 2007 has raised the geographical mobility.
iv) Market information enhances the geographical mobility of workers.
Methods of payment to labour:
1) Piece rate (paid according to their output/contribution to production), it’s usually used in industries where workers’ contribution and be easily measured both in quality and quantity.
To employees: Hard-working/laziness directly affect his paid.
To employers: Productivity raises since workers become more hard-working, and it reduces the need for supervision against shirking. But it’s hard to measure workers’ contribution sometimes; also, quality and quantity may not be held at the same time.
Example: Clothing industry, etc.
2) Time rate (paid according to their working hours), it’s usually used when the contribution is hardly measured or a high product quality is required.
To employers: They can have more stable income, but they can’t raise their wage significantly even if they work harder.
To employees: They don’t need to calculate worker’s contribution and administrative fee is reduced, also workers will have more time to aim on the quality of the product. But workers may shirk as the have a stable income so that more supervision is needed and raise the administration fee.
Example: Sales and lifeguards.
3) Profit sharing scheme – a portion of the profit is distributed to workers. It’s used among supervisors and managers which is decisive to the profit.
To employees: They may want to work harder for higher income, but they bear risk at the same time.
To employers: It raises workers’ loyalty and shifts part of the business risk to the workers. But it’s hard to calculate the portion of sharing and free rider (shirkers) may appear. Sometimes the workers don’t want to bear risks. This may reduce their loyalty.
Note that basic salary (time rate) + commission (piece rate) is not profit sharing.
4) Tips refer to the gift of money paid by customers to reward workers who provide direct services to them. It’s used for workers whose directly provide services to customers.
To employees: Working performance directly affect their income.
To employers: Supervision can be reduced; lower basic salary can be paid, tips instead, this shifts the business risk. Workers’ incentive to work increases, but they may not want to bear risk if there’s no basic salary.
Example: waiter (time rate + tips), street artists (pure tips)
Production and division of labours
Production and Division of labour
Production is the process that changes resources to goods or services. The final objective of production is to satisfy wants.
Classification of production:
1) Physical form: goods (tangible) or services (intangible).
2) Producer (capital) goods (bought by producers for production) and consumer goods (to satisfy wants).
3) Private goods or public goods refers to their degree of rivalry and excludability in consumption.
Types of production:
1) Primary production: activity that extracts or directly uses the natural resources.
2) Secondary production: activity that turns raw materials into (semi-) finished products.
3) Tertiary production: activity which provide services.
The three type of production is interdependent. Primary and secondary producers outputs producers good to other industry while tertiary producers provides services to the other industry. Primary and secondary producers provides consumer good to household (consumer) while tertiary producers provides services to the household.
Production provides employment opportunities for resources so that they can earn income and spend on consumption. Also production provides goods and services for consumption or further production.
Contribution of different types of production can be shown by the % contribution to total employment and total value of production.
Division (specialization) of labour
1) Simple division of labour refers to a worker specializes in producing a particular good.
2) Complex division of labour refers to a worker specializes in a particular production stages in a particular role in teamwork.
3) Regional division of labour refers to a locality specializes to produce a particular good or production stage of a good. (Locality: district/city/province/country/group of countries, etc.)
Advantages of division of labour:
1) Employers can assign different workers on different workers depending on his talents, and more products can be produced. Therefore workers can be more productive and productivity is raised.
2) Workers specialize in a particular stage and do the same job repeatedly, then they’ll become more skillful on that production stage and more productive at it.
3) Since workers concentrate only on a small part of work, training time can be saved for production.
4) When workers concentrate on a particular part of job, they need not move around for different production stages and saved time for production.
5) Specialization implies that each worker only needs a few tools for each worker, but not a full set of tools for every worker to produce the whole product by himself. Therefore fewer capital goods are needed. Money (capital) can be saved.
6) If whole set of tools is given to every worker, when a worker is concentrate on a production stage, the remaining tools are idle and scarce tools are wasted. With specialization, tools can be used all the time by the most productive workers, and then capital goods can be used efficiently.
7) Production is broken into simple tasks during specialization, and machines for simple tasks are easier to be designed, and supply of machines increases. Therefore mechanization is reduced, induces technological advancement and improves productivity.
8) When productivity increases, more time is available for leisure and designing new products. As a result, people enjoy larger volume and greater variety of goods for consumption and raises living standards.
Disadvantage of division of labour:
1) Works become boring
2) Workers may not realize their contribution and loss satisfaction.
3) Over-independent on different stages: Disruption in one hinders the others. For example, a strike of wharf hinders the transportation of many industries which import raw materials.
4) Workers only learn a particular skill only and do not know other production skills.
5) Greater risk of unemployment if the worker only knows a few skill.
6) Products are standardized under mass production and reduce consumers’ choice and satisfaction.
Factors limiting the use of division of labour:
1) When the market size of a product is small, the extent of division of labour is limited (small scale/no division of labour) since small amount of labour and outputs are required only.
2) Nature of products: mass production is not suitable for those required individual creativity.
3) Trade barriers and quotas reduce volume of trade (demand), then scale of division of labour is restricted.
Ch.8 Forms of ownership
I'm not going to bold key words since
- i)Almost all words is key words here;
- ii)Bolding kills me, meh.
Please wait for the .doc file (Maybe pdf lol) for chapter 8-11.
1) Public ownership
It includes two types of ownerships: government departments and public corporations. It refers to the ownership of government or its agencies with the right of possess, control, use and dispose of property.
Government departments are the government organizations owned, managed and financed by the government. It provides public services to society by a low price. Examples include Fire Services Dept. and Water Supplies Dept..
Public corporations is the firms incorporated by statute, owned by the government but financially independent of the government, and the government appoints a board of directors to manage it. They provide specific public services according to commercial principals. Examples include the Airport Authority and the Hong Kong Science and Technology Parks.
2) Private ownership
There’re five types of private ownership. The two with unlimited liability is called sole proprietorship and partnership. The three with limited liability is called private limited company, public limited company and listed company.
(We denote its short form by SP, P, Pr, Pu and L for the five types of companies here.)
Difference between owners with limited and unlimited liability:
- 1) Limited (unlimited) liability --(no) separate legal existence from the owners, the (owners) company are fully responsible for the debts and obligations of their business. Shareholders’ loss is confined to their investment in limited company.
- 2) Unlimited liability also means the owners own properties, make contracts and engage in lawsuits by themselves, not the company. Limited liability gives separate legal status to the company.
Other features of company:
- 1) Number of owners: SP: 1 P: 2 or more Pr: 1-50 Pu/L: unlimited
- 2) Simple and inexpensive set-up procedures for SP/P – register with Business Registration Office of the Inland Revenue Dept. and obtain a Business Registration Certificate. But for limited companies, they have to register with the Companies Registry to obtain a Certificate of Incorporation and pay a capital fee.
- 3) Companies with unlimited liability have limited source of capital while limited companies have wider source of capitals since they can issue shares.
- 4) Owners of company of SP and P has the right to possess, use, earn income from and transfer properties related to his business, Every partner makes decisions on behalf of the firm even without the consent of other partners by legally bindings. Partners bear collective responsibility and have higher risk than SP.
- 5) SP and P usually manage their business themselves. With more partners, they can have a wider scope of specialization in management. For limited companies, management and owners (shareholders) are separated usually.
- 6) As SP and P can keep all of the profits, they have a stronger incentive to improve efficiency (maximize profits). But for managers in limited companies, they won’t earn much more even they raised the profit; so they have a weaker incentive to improve the efficiency.
- 7) Consultations among partners gives them a better (prudent and feasible) decisions than SP. But that will decrease their flexibility. Limited companies do more consults before they make decisions; therefore they have even lower flexibility.
- 8) Since owners manage their business in SP and P, they can establish close relations with employees and customers. It enhances employees’ morale and customers’ loyalty. But for limited companies, since owners don’t involve in the management, owners’ relationship with employees and customers become more distant.
- 9) Only Pu and L is required to disclose the financial account to public.
- 10) SP can transfer his business freely. Partners can transfer his ownership after the consent of other partners. Shareholders in Pr ask board director’s approval before he transfer his ownership. Shares can be transferred without restriction for Pu/L.
- 11) SP/P will end when there’s an admission, withdrawal, bankruptcy or death of any owners. Limited company ends only when it’s liquidated.
- 12) In Hong Kong, SP/P have a lower profit tax rate than limited companies. While limited companies have a higher profit tax rate.
Other differences between private and public limited company:
- 1) Pr can’t invite public subscription for its shares while Pu can.
- 2) Pu is also a listed company when the transactions of the shares of that company are conducted in stock exchange.
We form a sole proprietorship when we have a small amount of capital and limited specialist skills; partnerships formed when each partners trusts each others, they may have different specialist skills so that they can share their expertise and share the cost of equipment.
For SP/P, they can obtain capital through retained profits, owners’ savings and borrowings. For limited company, they can also issue shares and debentures and borrowing from banks.
A share or stock is the certificate of ownership (owners) which enables the shareholder to share the profit (dividends) refer to the company’s profit and its dividend policy.
A bond or debenture is the certificate of debt (creditors) which enables the bond holder to earn interest until redemption or the maturity date. They can a fixed interest.
Features:
- 1) Shareholders may not receive dividends depending on the profit and dividend policy.
- 2) Shares have no maturity dates while bonds have.
Priority of payment upon liquidation:
secured creditors, liquidators, government and employees, unsecured creditors (bond holders) and shareholders.
