Notes, summaries, assignments, exams, and exercises for Economics for Secondary education

Understanding Dumping in International Trade

Dumping is the practice of selling at a lower price in the external market than in the domestic market. Two conditions are required for this to occur: segmentation of the market and imperfect competition in at least one of the two markets. Sometimes, dumping is also defined as selling below the cost of production.

Trade Creation and Trade Diversion

Trade creation is the expansion of trade that results from the formation of a Free Trade Area (FTA) or a Customs Union (CU).

Trade diversion is a shift in the pattern of trade from low-cost world producers to higher-cost CU or FTA members.

Free Trade Areas vs. Customs Unions

Both types of arrangements remove trade barriers between member countries. However,...

Core Financial Definitions

• Opportunity Cost: The difference in return between an investment one makes and another that one chose not to make.
• Risk: The possibility that the actual return on an investment will be different from its expected return. A vitally important concept in finance is the idea that an investment that carries a higher risk has the potential for a higher return.
• CAPM: A financial risk model used by analysts in their valuation process (Expected Return = Risk-Free Rate + Specific Stock Beta × Equity Risk Premium).
• DCF: Techniques used by investment bankers for merger and acquisition analysis, Wall Street traders to value all types of debt obligations, and Wall Street analysts to value stock.
• Free Cash Flow to the Firm (FCFF): The

Economic Impact of Monopolies

Monopolies cause a lot of harm to an economy as there is nobody to compete against them. In some countries, monopolies are banned, so they have to break up into smaller companies.

Protecting Employees in the Workplace

Employees need protection in several key areas to ensure fair treatment and safety.

Anti-Discrimination Laws

Protection is required against unfair discrimination at work and when applying for jobs for those who:

• Are of a different race
• Belong to a different religion
• Are of the opposite sex
• Are considered too old or too young for the job
• Are disabled in some way

In most countries, these forms of discrimination are illegal. In the UK, for example, these are governed by acts established by Parliament.

Health and

Economic Systems and Basic Decisions

An economic system is the way individuals organize a society to solve their basic economic problems: What, how, and for whom to produce?

Economic Doctrines and Economic Systems

A doctrine is the set of economic ideas and opinions of a group of leading economists. They are:

• Liberalism: Rests on market performance. According to Adam Smith, every citizen is the best judge of their own interest and should be given the freedom to satisfy it, as well as advance the common good.
• Marxism: Relies on state intervention and centralized planning. (Karl Marx)

Centralized Economy

A centralized or authoritarian economy is a mode of economic organization in which key economic functions are performed primarily by the state. In...

Key Supply Factors Affecting Production

• Climate: Increases or decreases production capacity (e.g., due to drought or floods). For example, if a tomato field floods, production decreases, and the supply curve shifts to the left.
• Joint Products: Goods derived from the same production process (e.g., meat and leather). A change in the price of one affects the other. If the price of meat increases, the supply of leather might decrease (shifts left), while the supply of meat increases (shifts right).
• Rival Goods: Goods produced using the same resources. Producing more of one means fewer resources are available for the other. For example, a timber company must decide between making chairs or pencils. Increasing production of chairs decreases the supply

Understanding Trade Advantages

Absolute vs. Comparative Advantage

According to the criterion of absolute advantage, if Germany were more efficient in producing both cheese and jackets, all production for both Germany and Romania would be manufactured in Germany. However, the criterion of comparative advantage states that both countries can gain if Romania specializes in a part of the production and exports to Germany.

Identifying Comparative Advantage: Germany & Romania

Applying the criterion of comparative advantage involves comparing productivity in each country. We consider the opportunity cost of producing one good in terms of the other.

Opportunity Cost Calculation

• In Germany, producing one jacket requires giving up 2 kg of cheese (a ratio

Key Organizational Features

• Organize labor and generate employment
• Create and meet consumer needs
• Develop and produce products or services
• Produce and broadcast technology
• Create, transmit, and receive cultural expressions
• Distribute and redistribute resources
• Generate, possess, and transmit power
• Create, store, transmit, and modify knowledge
• Reflect contemporary society
• Create symbols, imagery, and prestige
• Enable the achievement of general and specific goals
• Facilitate linkages between interacting individuals and groups
• Provide spaces for personal and professional development

Factors Influencing the Enterprise

The market society is the arena where various actors exchange goods and services for profit. Stakeholders are members of society engaged in commercial...

The Welfare State Model

The Welfare State is characterized by significant public expenditure on social benefits. It is responsible for providing essential services such as health, education, and housing, and actively intervenes in labor relations and the economy. Its primary goal is to ensure that benefits are distributed equitably, rather than disproportionately favoring those with greater wealth.

The Liberal State Model

The Liberal State advocates for a laissez-faire economy, allowing it to operate without significant government interference. It posits that workers must negotiate their working conditions directly with companies. Consequently, the Liberal State typically minimizes investment in social welfare programs.

Geopolitical Conflicts and

Human Needs and Categories

Needs

• Primary: Those that a person must always meet.
• Secondary: Those that, when satisfied, are less rigid.
• Present: Needs that must be addressed throughout the day.
• Future: Needs that will appear over a longer period.
• Concurrent: The needs we meet simultaneously; not necessarily sequential.
• Additional: When one need generates another.

Theories of Value

Production Cost Theory

Leading theorist David Ricardo considered the value of goods by reference to their exchange value from the supply side. The theory states that, except for exceptional goods or monopolies, for goods whose production can increase or decrease freely, value is determined by the cost of production (including a profit margin for the seller).

Criticisms

• It is not

Understanding Consumer Behavior: Focusing on Needs

Understanding consumer needs is the crucial first step in implementing the marketing concept, as it is difficult to meet customer needs effectively otherwise.

Defining Consumer Behavior

Consumer behavior refers to the activities carried out by a person or organization when they perceive a need to purchase and use a product or service. A distinction is often made between final consumer behavior and the behavior of organizations.

Studying End-User Behavior

The study of end-user behavior includes these aspects:

• The purchase behavior of individuals or groups for their own consumption or that of third parties (e.g., family members). It includes the activities undertaken to obtain a good or service.
• The