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

Factors Affecting Consumer Spending

A nation’s consumer spending is affected by:

1. Current Disposable Income: Measured using the Average Propensity to Consume (APC) and Average Propensity to Save (APS).
2. Permanent Income: Based on the life-cycle model, measured using the Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS).
3. Wealth: Calculated as assets minus liabilities (e.g., home equity minus mortgage) of a country, representing the sum total of individual residents’ wealth.

Components and Influences on Investment

Investment is composed of:

• Purchase of buildings.
• Equipment (machinery and production tools).
• Additions to stock (or inventory) of inputs and output.

Investment decisions are affected by:

1. Revenues: Firms invest if they

Customer/ cliente: is a person who buys goods or Services.

Customer loyalty/ Fidelización del cliente: is when a supplier receives the ultimate reward for His efforts.

Customer royalty: nobleza del Cliente.

Customer care/ atención al Cliente: is a service provided by companies, where they solve queries of Customers.

Repeat Business: customers to buy from companies again And again.

Code of practice: set of Rules. Explains what the consumer can expect of the company. Service: job where People do or provide something rather than produce something. Goods: are Products or objects that can satisfy people's wants.

Marketing: is the process Of performing market research, selling products to customers. Telecommunications: is the transmission of information,...

Fundamentals of Entrepreneurship and Business Structures

Defining Entrepreneurship

Entrepreneurship is the process of initiating a business venture, organizing the necessary resources, and assuming the associated risks and rewards.

Social Entrepreneurship: Creating Value

Social entrepreneurship focuses primarily on creating social value by providing solutions to social problems, with a secondary purpose of generating profit and returns.

Key Unincorporated Business Structures

Sole Proprietorship

A sole proprietorship is defined as an unincorporated business owned by an individual for profit. Proprietorships make up the majority of businesses in the United States. This form is popular because it is easy to start and has few legal requirements.

Advantages

Potential Drawbacks of Revenue Management

While revenue management offers significant advantages for businesses, certain practices can lead to customer dissatisfaction. Hotels, in particular, should avoid the following:

• Offering insufficient benefits in exchange for restrictions.
• Imposing overly severe restrictions on discounts.
• Not informing customers of changes in the reference transaction.

Insufficient Benefits for Restrictions

First, if hotels do not offer sufficient incentives to customers in exchange for imposing restrictions, customers are likely to view the practice as unacceptable. For example, in this study, respondents did not view a free breakfast or a room upgrade as an acceptable trade-off for cancellation penalties.

Overly Severe Discount

Foreign Exchange Markets and Risk Management

Sectors of the Foreign Exchange Market

• Spot Market
• Forward Market
• Currency (Market)

Determinants of Foreign Exchange Rates

1. Interest Rate Differentials
2. Inflation Rate Differentials
3. Government Policies
4. Market Expectations
5. Investment Opportunities
6. Speculations

Risks Faced by International Companies (Exposure Types)

• Transaction Exposure Risk
• Economic Exposure Risk
• Translation Exposure Risk

Methods of Managing Foreign Exchange Risk

1. Exposure Netting
2. Forward Exchange Contracts
3. Currency Futures and Options
4. Currency Swaps Agreements
5. Foreign Currency Bank Accounts
6. Appropriate Capital Structure

Foreign Exchange Terminology

1. Exchange Rates
2. Spot Rate
3. Forward Rate
4. Direct Quote
5. Indirect Quote
6. Two-Way Quote
7. Bid Rate
8. Offer Rate
9. American Quote
10. European

Core Concepts of Marketing Promotion

Promotion: communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior.

Primary Methods of Selling

• Personal selling: direct spoken communication between sellers and potential customers, usually in person but sometimes over the telephone.
• Mass selling: communicating with large numbers of potential customers at the same time.
• Advertising: any paid form of non-personal presentation of ideas, goods, or services by an identified sponsor.
• Publicity: any unpaid form of non-personal presentation of ideas, goods, or services.
• Sales promotion: those promotion activities—other than advertising, publicity, and personal selling—that stimulate interest, trial,

Direct and Indirect Exporting

• Exporting
  • Exporting can be direct or indirect.
  • In direct exporting, the company sells to a customer in another country.
  • The Internet is becoming increasingly important.

Exporting may be done passively or actively. Passive exporting occurs when a business receives orders from abroad without actively looking for them. Active exporting involves developing policies for setting up systems for organizing the export function and for dealing with export logistics, documentation, and finance.

With indirect exporting, intermediaries handle most aspects of export deals. Returns are obviously lower. You lose control over final selling prices.

• Indirect Exporting: Products are sold to a third party who then sells them within the

Sole Proprietorship

A sole proprietorship is a business structure where an individual owns and operates the business. The owner contributes the capital, manages operations, and is solely responsible for the business's outcomes. They may work alone or employ others. This structure is the easiest to form and simplest to organize. The sole proprietor can borrow funds or utilize others' money for business purposes.

Advantages of Sole Proprietorship

Easy to Start

Forming a sole proprietorship is easier than partnerships or corporations. There are no legal formalities like agreements, memorandums of association, or articles of association.

Easy to Dissolve

Dissolving a sole proprietorship is simple, as the owner doesn't need permission from shareholders...

Ch. 1 — Operations and Supply Chain Management

Ch. 1 — Operations and Supply Chain Management - design, operation and improvement of the systems that create and deliver the firm's primary products and services.

Key Processes

• Operations processes - how things are made.
• Supply chain processes - how things are moved.
• Supply chain management - the integrated management of operations and supply chain processes.

Definitions

• Process - One or more activities that transform inputs into outputs. Types are planning, sourcing, making, delivering, returning.
• Product-service bundling - when a firm builds service activities into its product offerings to create additional value for the customer.
• Mass customization - the ability to produce a unique product exactly