(Solved) Financial and Economic Literacy for Managers - Assignment

Running head: FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Financial and Economic Literacy for Managers
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Authors’ Note

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FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Table of Contents
Solution to Question 1:...............................................................................................................2
Solution to Question 2:...............................................................................................................6
Solution to Question 3:...............................................................................................................9
Solution to Question 4:.............................................................................................................12
Solution to Question 5:.............................................................................................................14
References................................................................................................................................18

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FINANCIAL AND ECONOMIC LITERACY FOR MANAGERS
Solution to Question 1:
Business economics concepts of market structure
As rightly indicated by Lusardi and Mitchell (2014), market structure can be defined as
organizational as well as other features of a market that in turn elucidates the nature of
competition along with pricing policy pursued in the market. Market Structure refers to a
categorisation system for the important market traits, counting the total number of firms,
overall similarity of products marketed and the ease of entry as well as exit from the specific
market.
The categories of market structure include the following:
Perfect Competition: This market is characterised by large number of business firms,
homogeneous products, and firm’s freedom of entry and exit from the market (Fernandes et
al. 2014).
Monopoly: Monopoly market structure refers to one where there is only one business firm
prevailing in a specific segment. Essentially, a specific firm dominates the entire market and
there are barriers for entrance of new firms along with supernormal profit.
Oligopoly: An industry that is dominated by a few number of business concerns. Essentially,
it can be said that oligopoly is a specific market structure in which few firms dominate and
the time when a particular market is shared between corporations, it is said to be highly
concentrated (Mitchell and Lusardi 2015).
Monopolistic Competition: Monopolistic competition refers to a specific market structure
that combines diverse components of monopoly as well as competitive markets. In itself,

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FINANCIAL AND ECONOMIC LITERACY FOR MANAGERSmonopolistic competitive market can be characterised by freedom of entry as well as exit, but
corporations can differentiate between products of the firm (Allgood and Walstad 2016).
Basic Concepts of small and medium enterprise (SME)
As correctly indicated by (), small as well as medium enterprises can be considered to be any
business having less than 250 employees. As such, there are around 5.7 million SMEs
operating in the UK during the year 2017, which was over and above 99% of diverse
businesses. SMEs can be considered as one of the primary drivers of nation’s economic
growth as well as innovation. It can be hereby mentioned that enhancement in the total
number of SMEs in the nation can increase the job creation as well as income per capita
(Klapper et al. 2015). As individuals become wealthier, they intend to increase their level of
consumption that consequently can open up numerous opportunities in the market that can
persuade creation of higher number of SMEs.
Basic Concepts of multinational corporations (MNC)