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

Step 1: Clarifying What We Are Talking About

Globalization

Globalization is increasing economic integration among countries due to trade, migrations, and capital flows.

Trade

• Imports and exports of goods and services
• Imports and exports of licenses, patents, copyrights -> licensing, franchising market entry modes

Migrations

• Movement of people -> remittances, working visas

Capital Flows

• Inward and outward Foreign Direct Investment (FDI) (long term, owning and controlling assets) -> mergers, acquisitions, equity alliances
• Inward and outward Foreign Portfolio Investment (FPI) (short-term speculative investment)

Step 2: Identify Data Sources

Identify data sources where to find data from these variables (OECD, EUROSTAT).

Step 3: Gather the Data

Step

Calculating the Degree of Openness

To calculate the degree of openness, we use the formula: (X + M) / GDP.

Benefits of International Trade

• Peace through commerce: Mitigation of economic conflicts (e.g., USA vs. China) and increased international agreements.
• Specialization: Achievement of economies of scale.
• Consumer Choice: Greater variety of goods and services.
• Infrastructure: Enhanced global mobility and connectivity.

Disadvantages of Trade

• Dependency: Reliance on foreign markets.
• Global Effects: Systemic risks and externalities.
• Inequality: Disparities at both international and national levels.

Factors Limiting Gains from Trade

• Information Asymmetry: Lack of transparent market data.
• Transportation Challenges: Impact of weather and the need for technological

Stage 1: Has a Need (Thirsty)

(HAS A NEED) Stage 1: The consumer is "thirsty", desire to cool down ... "the spark of life" (de Goizueta, 2000: stomach quota). Multimedia advertising policy, PLV 4.84% (solo medios) sobre ingresos.

Stage 2: Decides How to Satisfy It

(DECIDES HOW TO SATISFY IT) Stage 2: Inside or outside the home? Be available at all times and in all places (Woodruff, 1960: an arm’s reach of your desire). Route to the universal market: 8% coste de la ruta al mercado.

Stage 3: Decides What to Buy

(DECIDES WHAT) Stage 3: "Buying mission" — immediate need (bar, vending machine, traditional). Purchase for consumption later (routine purchase, super; load purchase; hyper). Multi-format product policy.

Stage 4: Decides Where to Buy

(DECIDES...

Convergence Criteria (Maastricht Criteria)

Price Stability (Inflation)

Price stability — Inflation: The inflation rate of a given Member State must not exceed by more than 1.5 percentage points the average inflation rate of the three best-performing Member States in terms of price stability during the year preceding the examination of the situation in that Member State.

Government Finances: Deficit and Debt

Public deficit: When drawing up its annual recommendation to the Council of Finance Ministers, the Commission examines compliance with budgetary discipline based on two criteria.

• Annual government deficit: The ratio of annual deficit to GDP must not exceed 3% at the end of the preceding fiscal year. If this is not the case, the ratio must have

Foreign Investment Strategies

• Foreign Indirect Investment (Portfolio Investment): Specific assets and intermediate products transferred between two independent economic agents. In this instance, control over the resources is relinquished by the seller to the buyer, and only financial resources are transferred.
• Foreign Direct Investment (FDI): Investment made outside the home country of the investing company in which control over the resources transferred remains with the investor.

Corporate Integration Models

• Vertical Integration: When various stages of the production process are incorporated into one firm. This occurs because a corporation wants to ensure security of supply or reduce transaction costs. Example: BP may own oil wells in the Middle

WTO Agreements and Core Functions

The WTO agreements cover goods, services, and intellectual property. They manage these areas under the principles of liberalization—with permitted exceptions—to achieve lower customs tariffs and to keep services markets open.

Key WTO Responsibilities

• Handling Trade Disputes: The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing rules and ensuring smooth trade flows.
• Monitoring and Support: Monitoring national trade policies while providing technical assistance and training for developing countries.
• Institutional Cooperation: Collaborating with international institutions such as the IMF and the World Bank.

International Trade Theories

Absolute Advantage

Ethical Business Practices and Reputation

Businesses should operate ethically to safeguard their reputation, image, and profitability. Benefits include attracting and retaining high-quality workers and customers, generating positive publicity, and fostering strong business relationships.

Political Influences on Business Activity

Government Intervention and Policy

Governments: Utilize legislation and policies to oversee business behavior and influence activity (often referred to as an Interventionist approach).

Policies: Involve the use of taxation and government expenditure (Fiscal Policy), and the manipulation of interest rates (Monetary Policy) to affect the money supply and exchange rate, thereby influencing overall business activity.

• Deregulation:

Price Elasticity of Demand (PED)

PED measures the responsiveness of demand after a change in the good's own price.

Formula for Price Elasticity of Demand

Formula: % change in quantity demanded / % change in price

Interpreting PED Values

• PED = 0: Demand is perfectly inelastic.
• 0 < PED < 1: The percentage change in demand is smaller than the percentage change in price (price inelastic).
• PED = 1: The percentage change in demand is the same as the percentage change in price (unit elastic).
• PED > 1: Demand responds more than proportionately to a change in price (price elastic).

What factors determine the PED of a product?

Number of close substitutes

The more substitutes available to customers, the more price elastic the demand tends to be.

Price relative

Sustainable Design and Financial Strategies

High-Value, Eco-Conscious Products

Our updated designs reflect strong values. Despite higher prices, customers choose our products due to our commitment to environmental responsibility.

Cost Structure

This section outlines key financial considerations for various business models.

Fixed Costs:

• Salaries
• Utilities (electricity, water)
• Facility rent
• Machine operation costs

Variable Costs:

• Materials
• Services (transportation, website maintenance)

Revenue Streams

We generate income through direct sales from our home base, utilizing recycled materials and a bootstrapping approach.

Innovative Local Marketing Strategies

Connecting with the Community

1. Catchy Viral Trends: Leverage trending websites and topics.
2. Local Partnerships: