Notes, summaries, assignments, exams, and problems for Economics

Spanish General Accounting Plan (PGC)

The Spanish General Accounting Plan (PGC) establishes the legal framework for technical accounting standardization. It aims to ensure that fundamental economic and financial information of companies is reliable and comparable.

Conceptual Framework

The conceptual framework is a set of fundamentals, principles, and basic concepts underlying the entire plan. It serves as an instrument that provides unity and consistency to the whole standard. Annual accounts must provide clear information.

Accounting Principles

• Going Concern: Financial statements are prepared assuming that the company will continue to operate in the foreseeable future.
• Accrual Basis: This involves the accounting records of business transactions

Microeconomics: Supply and Demand

Market Fundamentals

Supply and demand are fundamental concepts in economics, driving market dynamics. Modern microeconomics focuses on these forces and their impact on market equilibrium.

Markets

A market consists of buyers and sellers interacting to exchange goods or services. Buyer behavior determines demand, while seller behavior determines supply.

Types of Markets

Competitive Market

A competitive market involves numerous buyers and sellers, preventing any single entity from controlling the price. Prices fluctuate within a narrow range, balancing the interests of buyers and sellers.

Perfect and Imperfect Competition

Perfect Competition

Characterized by identical products, numerous buyers and sellers, and no individual...

Crisis Management

What is a Crisis?

A crisis is an extraordinary event or series of events that negatively impact an organization's product integrity, reputation, or financial stability, or the health and welfare of workers, the community, or the general public.

Examples of Crises:

• Product recall
• Plane crash
• Public sexual harassment complaint
• Hostage situation
• Product contamination
• Market/stock crash
• Indefinite strike
• Lawsuits

Crises are not always unexpected. Often, the organization is aware of the situation before the public.

Types of Crisis Responses

1. Defensive Responses

These are less effective if the organization is held responsible for the crisis.

a. Attacking the Accuser

This involves questioning the crisis's validity, challenging the logic and facts...

Building Franchise Confidence

Aspects to offer confidence over a particular franchise include acting in a specific area with dedicated centers, maintaining agreements with financial institutions to facilitate franchisee financing, and ensuring high franchisee satisfaction within the network.

Pre-Contract of Franchise Explained

As its name indicates, a pre-contract of franchise precedes the preliminary contract. It is a written document where the franchisor agrees to reserve, for a specific enterprise, the right to access the franchise in a particular area for a limited time, usually around two months.

Franchise Statements: True or False

• Both franchisor and franchisee are independent: True
• There is no specific Spanish law regulating franchises: True

Funding

Production analysis examines the relationship between the inputs used (labor, capital, land) and the resulting output. It provides the technical framework for how a firm decides to produce.

1. The Production Function

The production function is a mathematical statement showing the maximum output that can be produced from a given set of inputs: $Q = f(L, K)$, where $Q$ is output, $L$ is labor, and $K$ is capital.

• Short Run: A period where at least one factor of production (usually capital or land) is fixed. Production can only be increased by adding more variable factors (labor).
• Long Run: A period where all factors are variable. The firm can change its entire scale of production, such as building a new factory.

2. Total, Marginal, and Average Product

Defining Financial Management and Its Objectives

Definition of Financial Management

Financial Management is the strategic planning, organizing, directing, and controlling of a firm's financial activities. It involves applying general management principles to the financial resources of the enterprise to ensure the efficient acquisition and optimal utilization of funds to achieve the firm's overall goals.

It answers three fundamental questions for the business:

• Investment Decision (Deployment): Where should the firm invest its funds for the long term? (Capital Budgeting)
• Financing Decision (Procurement): Where should the firm raise the required funds, and in what proportion? (Capital Structure)
• Dividend Decision (Distribution): How should the firm

Economic Planning in Developing Nations

What is the significance of economic planning for a developing country?

Barbara Wooton defines economic planning as "a system in which the market mechanism is deliberately manipulated with the object of producing a pattern other than that which would have resulted from its spontaneous activity."

Resource Use for National Benefit

Economic planning ensures optimal use of economic and human resources for national benefit. It increases output based on national priorities and reduces resource wastage.

Boosting Capital and Development

Capital formation is crucial in economic planning. Planned economies prioritize future growth over immediate needs, fostering rapid economic development.

Reducing Economic Inequality

Economic...

Ricardian Model

Unit Labour Req.  Pears(Ib).  Oranges(Ib)

Home                  4h (aLp).         3h (aLo)

Foreign.              6h (aLp*).        1h (alp*)

Absolute Advantage - country takes less time to produce goods?

Home -> pears // Foreign -> oranges

Comparative Advantage - lower opportunity cost 

- Home has a C.Adv in pears production as its opp. cost of pears production is lower than foreign country - will specialize in pears

PPF (grafico) - (aLp · Qp) + (aLo · Qo) <= L

4Qp + 3Qo <= L (Qp = 300 & Qo=400)

Maximum home pears production is 300 and oranges 400

Slope = opp. cost - the opp. cost of pear is how many pounds of oranges Home must stop producing in order to make one more pound of pear

Absence of

Topic 1: Intro to FAB

Types of Businesses: Manufacturing (make & sell), Merchandising (buy & sell), Services (delivery etc.)

Business Structures: Sole Proprietorship -> owned and opened by 1 person; business is a separate entity from owner, owner is liable for debts. Partnership -> 2 to 20 partners; business is a separate entity from partners, partners are liable for debts.

Types of Partnerships: 1. General -> equal responsibility & unlimited liability. 2. Limited (Liability) -> 1 partner(s) not liable for debts beyond the agreed obligations. 3. Limited Liability Partnership (LLP) -> ≥2 partners are separate legal entities and are not liable for business debts. Business ceases if partner dies UNLESS have perpetual...

The purpose of economy is production of conditions and services for consumption now or in the future.