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

Adam Smith: A Key Theorist of Economic Liberalism

The Wealth of Nations was a milestone in the history of political economy. It is an investigation into the nature and cause of the wealth of nations.

Smith believed that private enterprise should act freely. Free competition leads to low prices, high technology innovations, and thus lowers the cost of production and helps overcome competitors.

Smith, instead of focusing on agricultural productivity problems, takes productive activity, understood as "work aided by capital," as the central economic concern.

According to Smith, the proportion by which the product of this work is divided among a greater or lesser number of consumers is what makes a nation more or less rich.

The Division of Labor

The effectiveness...

Types of Unemployment

Structural: This occurs when companies do not provide sufficient work for the population. Cyclical: This is produced when there is an economic recession or crisis. Seasonal: This is when the demand for workers is different in distinct periods of the year. Frictional: This occurs when a person decides to change their job and, while in this situation, they are unemployed.

Personal Income

This represents the gross salary of a person. A part of this money is appropriated by the state through taxes. The money that remains is called personal income or disposable income. Studies show that this income is divided between consumption and savings. The percentages are known in economics as the propensity to consume and save. Do not...

The Public Sector

The public sector integrates the economic activities of a nation within the governmental sphere. Classical economists advocated for economic liberalism and, therefore, were not in favor of state intervention in the economy. Socialist economists, followers of Karl Marx, think that the state has to have a central role in economic life. Keynesian economists, followers of the theories of John Maynard Keynes, are in favor of the state becoming an economic agent.

Principal Functions of the Public Sector

1. Normative Function: Regulating the activity of economic agents through the broadcast of legal norms, laws, decrees, etc.
2. Allocative Function: The state performs this function when it produces or provides goods and services, such as roads,

The Circular Flow of Income and GNP

The circular flow of income between businesses and families creates a constant exchange of goods and services along with their corresponding payments. This is known as the circular flow of income. These economic agents promote two types of exchanges: a real flow, where families provide businesses with factors of production, especially labor, and businesses produce goods and services sold to families, and a monetary flow through which companies offer payments to families for the factors of production employed and, in turn, receive payment for goods and services provided. Money flows through the circuit in two directions: from businesses to families and back to businesses. However, some money exits the circuit...

Setting the Initial Communication Strategy

Before choosing its communication tools, a company must determine its communication budget. This budget may be a flat fee or a percentage of total business, while also providing for the participation fees of different local partners. The company must choose between or combine several solutions, including:

Advertising Media

When opting for this means of communication, companies should pay particular attention to the following points:

• The choice between different media (TV, radio, press) depending on the nature of the product and the customs of the country.
• Compliance with regulatory constraints. There are three levels of constraints:
  • Banned advertising: This applies to products related to public health, such

Factors That Influence Price

6.5 Factors That Influence the Price

For a business, the first consideration will be the objective to be enforced, and secondly, the marketing mix. Empresa1 is set by factors. The company has the following objectives:

• Obtain the maximum benefit from the product they sell.
• Achieve maximum return on the investment made.
• Increase sales in the market.
• Be the leader in a segment or a product.
• Market segments at the start of competition.
• Create an image and reputation through the marketing mix.
• Get brands to better position themselves in the market.
• Obtain more benefits and price competitive differentiation.
• Stay in the market and evolve.

2. Marketing Mix

In the product, influences include (image, collateral design, additional services)

Tax Quotas, Deductions, and Filing Requirements

How are state and regional liquid quotas calculated?

The liquid state share is derived from the full state share, after applying a percentage of total deductions (e.g., 67% of general deductions in 2009) and deducting for rent of residence. The result cannot be negative. The liquid regional share is calculated by subtracting from the regional share a percentage of state deductions (33%), the regional portion of the deduction for primary residence investment, and the amount of autonomous deductions.

How is the differential fee calculated?

The differential fee is obtained by adding the liquid state and regional assessments, and then subtracting deductions for double taxation of dividends, international...

Microeconomics: Key Concepts and Principles

Ceteris Paribus Clause

The ceteris paribus clause, when used in the context of the role of offer, does not include changes in the income of consumers.

Law of Diminishing Returns

In the context of the law of diminishing returns, the technical maximum coincides with the maximum total return.

Isocost

The slope of the isocost reflects the relative price of the two factors.

Homogeneity of Demand Functions

The fact that demand functions are homogeneous of degree zero in prices and incomes implies that changes in prices and income, in the same proportion, do not alter consumer demand.

Labor Supply Curve

When the labor supply curve bends backward, it indicates that from a certain wage level, further increases reduce...

Regulation of Circulation Through the Central Bank

The Central Bank uses monetary policy as an instrument to achieve full employment and stability in the currency's value. It regulates operating cash through discounting and Open Market Operations.

Discounting

Discounting is the acquisition of a credit document at its current value or face value, discounted at an interest rate for the period of maturity. Rediscount is a practice of central banks issuing currency and is the discount of a document granted by commercial banks. This operation is intended to expand the money supply in line with the growth of the economy. Central banks charge a discount rate for this transaction, which can increase or decrease depending on the purpose of reducing or...