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

Functions of Financial Markets

Price Determination

• When a company has assets listed in a financial market, it can determine their worth.
• Investors can ascertain the value of their investments.
• Markets offer liquidity for investors' assets.

Financial Assets Characteristics

Liquidity

Ease with which an asset can be converted into cash.

Return and Liquidity Relationship

• If an asset is very liquid, the return asked by investors is very low.
• When assets are less liquid, investors demand higher returns.

Risk

The probability of not recovering the principal or the coupons.

Rating agencies analyze the risk associated with issuers.

Types of Financial Markets

Primary Markets

These markets facilitate the issuance of new securities. Investors pay for the assets to the...

Causes and Effects of Monopoly Power

Introduction

The goal of the present study is to analyze the causes and effects of the monopoly power of companies.

Causes of Monopoly Power

• Incentives for companies to have monopoly power:
• High levels of benefit leading to investment in Research and Development
• Economies of Scale
• Efficient production and success

Effects of Monopoly Power

• Less competition and higher prices
• Allocative inefficiency and diseconomies of scale
• Lower prices to suppliers

Conclusion

Monopolies generally lead to higher prices and are more inefficient. However, may be the best outcome for some industries with substantial economies of scale. This investigation has a number of limitations to be considered in evaluating its findings.

Problems and

International Market Selection: A Systematic Approach

Expansive Approach

Firms gradually move into international markets, starting with markets similar to their domestic market. This approach reduces perceived risk and information requirements.

• Lower cultural distance: increased confidence
• Lower costs associated with unfamiliar markets

Screening Approach

Involves systematically filtering the global market using criteria to identify the most suitable market for the firm.

Aim: Identify the market with the greatest marketing opportunity.

Stages of Screening Approach

Stage 1: Initial Screening

Objective: Identify national markets for further analysis.

Stage 2: Analysis of Potential Sales for an Industry in Country

Consider:

• Forecast of future sales
• Minimum scale
• Transport

Sensitivity Analysis

2 Members of the Restrictions:

Sensitivity analysis is important because it allows us to determine the opportunity cost of resources.

Obtain Efficient Solutions

By optimizing one objective and considering the other as a parametric constraint, we can obtain an efficient solution for each value between its ideal and anti-ideal points of the objectives included as parametric constraints in the model.

Difference in Pairwise Comparisons in AHP and PROMETHEE

There are two types of pairwise comparisons in AHP: between criteria in the same level with respect to a criterion in the next higher level and between alternatives with respect to a criterion in the next upper level of the hierarchy. PROMETHEE is only based on pairwise comparisons...

1) Business and New Technologies

Working from Home

Nowadays, new technologies are transforming the business landscape. This composition will explore some of these impactful technologies.

Firstly, working from home has emerged as a prominent trend. This new technique allows individuals to work for a company remotely, eliminating the need to be physically present in the workplace. Working from home offers both advantages and disadvantages.

Advantages of Working from Home

• Cost Savings: Working from home allows individuals to save on various costs associated with commuting to work.
• Flexibility: Workers can enjoy the flexibility of choosing their own work hours, lighting, and overall work environment, enabling them to work in a framework that maximizes

4) China (Crisis/ Devaluation of currency/ Economy)

In 1978, China was one of the poorest countries in the world, but since the market reforms in that year, it has become one of the most powerful economic countries with a great potential. Its GDP has grown about 10 percent per year during the last 30 years, being the country with the biggest economic growth around the world, thus the living standard has reached that of a welfare society because about 500 million people are out of poverty. Moreover, it is the largest manufacturing economy in the world, the most important exporter of goods, the fastest growing consumer market, and the second major importer of goods in the world. For these reasons, with a population of 1.3 billion, it has become...

International Trade Fundamentals

Imports of Goods and Services (% of GDP)

Imports of goods and services represent the value of all goods and other market services received from the rest of the world. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.

Exports of Goods and Services (% of GDP)

Exports of goods and services represent the value of all goods and other market services provided to the rest of the world.

The Scope of International Trade and Government Regulation

The role of governments in regulating international trade and investment is substantial.

Types of International Trade

There are two primary types of trade:

• Interindustry Trade: Depends on differences across countries

The work of the Human Resources department

We all know that recruitment and selection is one of the tasks that the HR department fulfills. The other tasks will be discussed below:

• Recruitment and selection: Involves selecting and attracting the best workers.

Wages and salaries: Must be enough to motivate or attract workers.
Industrial relations: There must be effective communication between departments.
Training programmes: Must meet the training needs of employees and accomplish business objectives.
Health and safety: Must do things according to the law.
Redundancy and dismissal: Must obey all laws when firing workers.

Recruitment and selection

Workers are needed when a business starts up, expands or an existing employee leaves. Businesses use the...

Management Control:

Process by which managers ensure that resources are obtained and used in the most efficient way to achieve goals. Defines strategy, organization MCS. Steps: Set goals, planning budgeting, measuring actual comparing, corrective.

Strategy:

Set of plans to achieve goals.

SWOT Analysis:

Analysis of the overall strategic possibilities of business and its environment. Purpose is to identify strategies that will create a firm-specific business model that will best align an organization's resources and capabilities with requirements of the environment.

BCG Matrix:

Aims to identify high-growth prospects by categorizing the company's products according to market growth and share.

Porter:

For developing an organization's strategy. It determines...

Perfect Competition Properties

• P=MR
• Many Producers
• Homogeneous Product
• Many Buyers
• Price Taker
• Complete Knowledge of Input and Producer Prices
• Easy Entry and Exit

Monopoly Properties

• Heterogeneous Product
• One Producer
• Many Buyers
• Difficult Entry
• Producers Decide Price

Monopolistic Properties

• Many Buyers & Producers
• Slightly Differentiated Products
• Good Substitutes
• Easy Entry and Exit
• Producers Decide Prices

Oligopoly Properties

• Small Number of Firms
• Homogenous or Heterogeneous Product
• Price Decided by Firms
• Non-Price Competition

Optimum Output Conditions

TP= TR-TC, TP Slope = Derivative TP/ Derivative Q, if = 0 Profit is Maximum, MR=MC

1. MR=MC
2. Rising MC
3. P=Minimum AC
4. Zero Economic Profit

Slope MR is Horizontal, Per Unit Profit = P –AC, Total Profit = (P-AC)Q

Profit Situation=...