(a) Income of an entrepreneur is residual in nature as entrepreneur bear risk and reward of risk is profit. Profit is income remaining after deducting all the direct and indirect expenses.
Functions of an Entrepreneur
1. Risk bearing functions—Every business involves some amount of risks. The production of goods and services is always related to future estimated demands. The future demand is uncertain and unpredictable because it is influenced by changes in fashion, taste, price structure, Govt, policies, etc. Since this upredictable task is undertaken by the entrepreneur. He has to bear the risk. If his estimations prove to be wrong, in the entire business sphere, no other factor of production shares the loss incurred by the entrepreneur.
2. Originating—The entrepreneur conceives new ideas, new products and new processes. He also develops new techniques with a view to avail to better opportunities of maximizing profit ability in the business. Thus entrepreneur always looks, for changes and modification in business to further improvement.
3. Policy Making—He is the one who makes plans on which the whole organization runs. He hold regular meetings and makes guideline and distributes the work
b(i)
| Voluntary Debt | Compulsory Debt |
| It is a debt which is acquired from the people by government on a voluntary basis. In this people willingly subscribe to the government loans. | These are the loans which are forcibly taken from the people by the government. When government exercises its power for loans, they are known as complusory tax. |
(ii)
| Regressive Tax | Degressive Tax |
| 1. Regressive tax is one in which the rate of taxation decreases as the tax payers income increases. | A tax is called Degressive when the rate of progression in taxation does not increase in the same proportion as the income increase. |
| 2. A regressive tax takes a smaller percentage of people’* income the larger their income is. In this system, the rate of tax falls with increase in income. | In this case, the rate of tax increases up to certain limit, after that a uniform rate is charged and become constant |
