Notes, summaries, assignments, exams, and exercises for Economics for University

National Competitive Advantage

This is a national perspective!

Factor Endowments

The nation’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry. Must be industry and firm specific. Firm-specific knowledge and skills that are rare, valuable, difficult to imitate, and rapidly and efficiently deployed ultimately lead to a nation’s competitive advantage. Examples: Japan's JIT inventory management, low-cost and sufficiently high-quality software development in India.

Demand Conditions

Home countries with demanding consumers drive firms to meet high standards, upgrade existing products and services, and drive for further innovation. The home countries’ consumers influence, push,...

Exam Questions

GDP

GDP fails to measure changes in "the quantity of existing products that don't cause a change in price". Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy

True

Unemployment

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US unemployment rate?

Increases

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US labor force participation rate?

Increases

A recent college graduate who is still looking for their first job would be considered as

Unemployed

The eligible population is: 200,000. Employed:

Determination of Tax Liability in the Canary Islands

The determination of tax liability involves calculating the tax base for each taxable transaction, applying the relevant tax rate, determining the resulting tax liability, considering temporary entry criteria, and, for internal operations, applying tax rates and deductible temporary entry criteria deductions.

Determination of the Tax Base

The tax base consists of the sum of the consideration for the main operation and its ancillary benefits. However, for goods imported or manufactured on a different Canary Island, costs related to ports, airports, insurance, and freight required for transfer from the island to the delivery place are excluded from the taxable base.

Determination of the Tax Rate

0%

Royal Decree-Law of 6 March 2009: Urgent Measures for Employment Promotion and Protection of Unemployed Persons (Plan E)

Government measures for the protection of unemployed persons were subdivided into the Spanish Plan for Stimulating the Economy and Employment. Plan E has four strands, designed in 2009, allocating significant amounts of disposable income to support families and companies.

• The plan introduces measures to support job creation, including the Local Investment Fund and the Special Fund for the Revitalization of the Economy and Employment.
• The plan reflects proceedings taken in coordination with the European Union to provide liquidity to the financial system.
• It includes an ambitious agenda of reforms to modernize our economy, improve

Taxable Transactions

Summary Table

Taxable transactions:

• Sales of personal property.
• Provision or use of services.
• Construction contracts.
• First sale of property.
• Imports of goods.

Exemptions and Unaffected Transactions

Exemptions: (Appendix I - Appendix II)

Unaffected:

• Lease of movable and immovable property (only for natural persons with primary or secondary income).
• Re-transfer of business assets.
• Transfer of assets to educational institutions.
• Gambling.
• Imports of goods donated to religious institutions.
• Import of donated goods from abroad.

Birth of Tax Liability

In the sale of goods:

The date of issuing proof of payment or the date of delivery of the property, whichever occurs first.

The removal of property:

The date of retirement of the asset or the date...

IFRS for Small and Medium-Sized Entities (SMEs)

What are *not* the IASB's Objectives?

To strive for worldwide use of International Accounting Standards instead of national accounting standards.

What is the Primary Function of the IASB?

To develop and publish IFRS and strive for their worldwide use in general-purpose financial statements and other financial reporting.

What is the Primary Objective of IFRS?

IFRS sets out recognition, measurement, presentation, and disclosure requirements dealing with transactions and other events and conditions that are important in general-purpose financial statements.

What are the Major Differences Between IFRS and US GAAP?

Compared to US GAAP, IFRS are more principles-based, objective-oriented, and with emphasis on...

Economic Systems and Their Characteristics

Command Economy

Comparable to a monopoly, in a command economy, the government has explicit control over the price and supply of a good or service.

Mixed Economy

The main characteristic of a mixed economy is that while some sectors reflect private ownership and freedom, and the flexibility of the law of demand, other sectors are subject to government planning.

Established Economies

Examples of established economies include:

• North America
• European Union
• Japan

Emerging Economies

Emerging economies typically face relatively low GDP per capita and a workforce that is either unskilled or semi-skilled, but they exhibit sustained economic reform and growth.

Free Trade Agreements

The creation of free trade agreements has...

Introduction

Price is the sum of all the values that customers give up to gain the benefits of acquiring or using a product. It is one of the most flexible elements of the marketing mix, as prices can be changed quickly.

Importance and Impact of Price

Price has a major impact on a firm's market share and profitability. Due to fixed costs, a small change in price can have a larger impact on profit.

In recent years, the Great Recession and the internet have made it easier for consumers to compare offers, leading to more frugal and conscious spending habits.

Cutting Prices: Not Always the Best Answer

Cutting prices is often not the best answer, as it can lead to lost profits, damaging price wars, and cheapening the brand.

Instead, companies should focus...

1. Volatility of Returns

- Small company stocks

2. Christine's Return

P0= $42.40, P1= $38.20, Divd= 1.4%

- [(38.20-42.4)/42.4] + 0.014 = -8.51%

3. Scott's Annual Return

200 shares, P0= $48, n= 4 months, dividend= $0.22

HPR= -0.120

- Annual return= (1-0.120417)^(12/4)-1 = -31.95%

4. Annualized Return

Annual returns: 15%, 12%, -18%, 2%, 37%, n=5

- Standard deviation= 20.03%

5. Stock Return Range

Stock return= 14.6%, standard deviation= 19.2%, two-thirds of the time?

- -4.6% to 33.8%

6. Forecasting Returns

Historical dollar-weighted... If you want to forecast, the best:

- Arithmetic average return

7. Jeanette's Future Value

Investment= $12,000, n=4, arithmetic average= 8.72%, geometric average= 8.43%

- FV= 12,000(1+0.0843)^4 = $16,587

8. Black Stone's Geometric Average