Notes, summaries, assignments, exams, and exercises for Economics for Baccalaureate

Key Terms in Trade, Transport, and Tourism

Trade Terms

• Accessibility: Property applied to a space to express its ease of access or connection to the rest of the set.
• Bulk Trade: The trade is done with products packaged or labeled, which are sold by the merchant in the amount that the buyer wants.
• Distribution Network: Also called the commercial circuit, it refers to the relationship between points of sale and purchase. It varies depending on the goods and has a large spatial elasticity.
• Personal Services: Services directly engaged to meet a need of people, such as hairdressing or beauty services.
• Retail: Selling products directly to consumers in small quantities.
• Wholesale: Buying directly from producers and reselling the products to retailers in

Market Structures and Competition Dynamics

Market structures are constantly changing. A market that today has many competitors might tomorrow have very few, or even none. Competition is a key economic variable, and traditional theory often uses the model of perfect competition to explain it.

Perfect Competition

In a perfectly competitive market, no single agent or company can influence the price. Examples include basic commodities like bread, tomatoes, and oranges. This condition is generally met when:

• There is a large number of competitors.
• Information is perfect: all competitors know their rivals' prices, and all buyers know all product offerings.
• Firms can sell any amount of their product at the prevailing market price.

Imperfect Competition

Imperfect...

Gross Domestic Product (GDP)

GDP represents the monetary value of all goods and services produced by a country in a given period of time.

Characteristics of GDP:

• Follows a monetary standard.
• Considers only declared activities.
• References the value of final goods.
• Measures the value of what occurred within the borders of a country.
• Refers to what occurred within a specific period of time.

GDP at Market Prices (GDPmp): C + I + G + (X-M)

GDP at Factor Cost (GDPfc): Value Added by Sector A (VAA) + Value Added by Sector B (VAB) + ...

Nominal GDP is obtained by multiplying the quantities of final goods and services by the prices they had during that year.

Real GDP is calculated like nominal GDP, but it is multiplied by the prices of the year used as a base...

Y=C+I+G

Y=Co +\- @(Y-To) + Io + Go and/or +Xn

Y=Co+\- 1/@ - @To+Io+Go and/or + Xn 

Y - 1/@ = Co - @To +Io + Go and/or + Xn

Y(1-@) = Co - @To + Io + Go and/or + Xn

Y=Co - @To + Io + Go and/or + Xn

                 1 - @

C= Co + 1/@*d --- taxes

  = Co + @ (y-Io) --- no taxes

yd= y- To

K = 1/1-mpc

k= 1/mps

DI= c+s

APC = C/DI

APS = S/DI

MPC = 1 / 1-@

MPS = 1 / @

Multiplier = 1 / 1-mpc or 1/mps

xn = x-m

Ca = C +/- mpc * tx

Sa = S +/- mps * tx

Aggregate Demand - Total value of real aggregate output that both sectors of the economy are willing to purchase at some AVG price.

AD = L(p)

Investment rates, future business expectations, Technology, Degree of excess capacity, Business Taxes

Aggreagate Supply- Total value of real Aggregate output that will be...

Key Business Formulas

• Total Cost (TC): TC = FC + VC
• Average Total Cost (ATC): ATC = TC / Q
• Average Variable Cost (AVC): AVC = VC / Q
• Revenue: Price per Unit x Units Sold (P * Q)
• Profit: Revenue - Total Cost

Business Criteria Classification

1. According to the Nature of Economic Activity

• Primary-sector firms: Obtain useful resources from nature. Includes agriculture, mining, fisheries, livestock, etc.
• Companies in manufacturing or processing: Develop productive activity to physically transform some goods into others more useful for use. This area includes industrial and construction companies.
• Companies in the tertiary or services sector:
  • Commercial: Drive an increase in offering goods to consumers where and when they need them.
  • Service: Meet needs

This document outlines several fundamental business strategy frameworks crucial for analyzing market dynamics, competitive landscapes, and internal capabilities.

PESTEL Analysis: External Environmental Factors

The PESTEL analysis identifies key environmental variables that may influence a business, either positively or negatively. Choosing critical dimensions is essential for effective analysis.

• Political: Government agencies, pressure groups, lobbies, etc.
• Economic: Income, prices, inflation, debt, credit, etc.
• Sociocultural: Population, birth rate, lifestyle, consumption habits, etc.
• Technological: Innovation, technological changes.
• Ecological: Raw materials, sustainability, recycling, etc.
• Legal: Regulations related to competition, consumers, and

Cost Accounting Concepts and Objective Questions

Here are some key cost accounting concepts and objective-type questions to test your understanding:

Key Cost Accounting Concepts

1. Costing: Refers to the allocation of costs to cost centers and cost units.
2. Economic Order Quantity (EOQ): The optimal order quantity that minimizes total inventory costs.
3. Idle Time: Time spent by workers on unproductive activities.
4. Apportionment: The process of distributing overheads to various cost centers.
5. Profit under Absorption Costing: Higher when production exceeds sales compared to marginal costing.
6. Purpose of Cost Accounting: To ascertain and control costs.
7. Minimum Stock: The minimum level of inventory that must be maintained at all times.
8. Labor Turnover: Measured as

Entry Modes:

Exporting: Common first step for many manufacturing firms. Later, firms may switch to another mode.

Advantages:

• Avoids the costs of establishing local manufacturing operations
• Learning

Turnkey projects: The contractor handles every detail of the project for a foreign client, including the training of operating personnel.

Advantages:

• A way of earning economic returns from the know-how required to assemble and run a technologically complex process
• Less risky compared to FDI

Disadvantages:

• No long-term interest in the foreign country
• If the firm's process technology is a source of competitive advantage, then selling this technology through a turnkey project is also selling competitive advantage to potential and/or actual competitors

Licensing:

Investment & Trading

Key Concepts

Collateral: Assets a borrower uses to secure or guarantee a loan.

Shares: Certificates representing part ownership of a company.

Institutional Investors: Financial organizations that own a lot of shares.

Day Traders: People who buy and resell shares in a very short time, often just a few hours.

Raise Capital: To get money from investors with which to run a business.

Issue: To offer securities for sale to financial institutions and the public.

Market Dynamics

Bid-Offer Spread (Bulls & Bears): The difference between the buying (bid) and selling (offer) price of shares. Bulls are investors who buy shares expecting prices to rise, while bears sell shares anticipating price drops.

Market Makers: Traders who buy and...

Loans are contracts where a financial institution provides an agreed amount of money to a company, which undertakes to return it with pre-set interest according to a depreciation plan until total repayment. Credit is a contract where a financial institution opens a credit line for a company, allowing it to access funds up to an agreed limit. Interest is paid only on the amount utilized, and repayment occurs within a specified period.

Bondholders and Shareholders: As an investor, you have two main choices for investing in a company: purchasing its shares or buying its bonds. Shareholders own stock in a company. Both investments offer opportunities to make money, but each carries inherent risks.

Forex refers to the foreign exchange market. Each...