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

Fixed Costs

Fixed costs are the costs of production that a business has to pay regardless of how much it produces or sells. Fixed costs exist even if there is no output. These costs remain unchanged in the short run. They can change, but these changes happen independently from the level of output.

Scale of Operations

Scale of operations is the maximum output that can be achieved using the available resources. It can be increased in the long term.

Variable Costs

Variable costs are the costs of production that change in direct proportion to the level of output or sales. These include commission earned by staff, raw materials, packaging costs, etc. In theory, if there is no production, then variable costs equal zero.

Contribution

Contribution refers... Continue reading "Business Operations: Costs, Ventures, and Integration" »

Understanding Company Structure and Accounting Principles

A company is a legal entity made up of an association of persons, be they natural, legal, or a mixture of both, for carrying on a commercial or industrial enterprise. An accounting cycle is a set of steps applied in the accounting of a company. The general ledger contains all the accounts for recording transactions relating to a company's assets, liabilities, owner's equity, revenues, and expenses.

Elements of a Company

• Merchant
• Worker
• Technology
• Provider

Principles and Ethics Code of an Accountant

Accountants must adhere to a strict code of ethics, including:

• Integrity: The accountant must be upright in all their acts. It is not allowed to make any act that could discredit their profession.
• Discretion:

Key Accounting Terms

• Entries: Journal analysis of the effects of a transaction on the accounts, usually accompanied by an explanation of the transaction.
• Ledger: Single accounts kept updated by posting. Each is recorded with one debit and one credit.
• Assets: Resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
• Liabilities: Obligations of the enterprise arising from past events, expected to result in an outflow from the enterprise of resources embodying economic benefits.
• Equity: What is left of the assets after liabilities are deducted. Capital or owner's interest, withdrawals.
• Expenses: Amounts that have been paid or will be paid for costs that have been incurred

Fundamental Accounting Principles

Accrual Basis of Accounting

Revenue is recognized when earned, and expenses are recognized when incurred, regardless of when cash changes hands.

Cash Basis of Accounting

Revenue is recognized when cash is received, and expenses are recognized when cash is paid.

Matching Principle

Requires expenses to be recognized in the same period as the revenues they helped generate.

Time Period Principle

States that a business should report its financial results over specific, consistent time periods.

Key Financial Statement Components

Current Assets

Assets expected to be converted to cash, sold, or consumed within one year or one operating cycle, whichever is longer.

Long-Term Investments

Investments held for more than one year, typically... Continue reading "Essential Accounting Terms & Financial Definitions" »

CHAPTER 3

16) If the world terms of trade for a country are somewhere between the domestic cost ratio of H and that of F, then

B) country H and country F will both gain from trade.

17) If the world terms of trade equal those of country F, then

A) country H but not country F will gain from trade

18) If the world terms of trade equal those of country H, then

E) country F but not country H will gain from trade

CHAPTER 4

37) In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in the welfare of the fixed factor in the production of cloth.
A) an ambiguous change;... Continue reading "International Trade and Specific Factors Model" »

Address the least developed countries' special needs:

• Tariff- and quota-free access for their exports
• Enhanced debt relief for heavily indebted poor countries
• Cancellation of official bilateral debt

Address the special needs of landlocked and small island developing states.

Deal comprehensively with developing countries' debt problems.

Develop decent and productive work for youth.

In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.

Activity: Global Public Good

i. Choosing one global public good. Argue why it should be considered as a global public good.

- Author defines global public good as a good, service, or resource that is available for all because it involves non-rivalry and non-excludability.... Continue reading "Developing a Global Partnership for Development: Addressing Special Needs and Debt Problems" »

troškovna primjena??

How to use implications of multiple output cost functions?

Economies of Scope and Cost Complementarity

Economies of scope

• total cost of producing both products together is less than the total cost of producing both products separately

Implications for managerial decision making: managers alert to the possibility of profitably extending the product line to exploit economies of scope: reasons for mergers and acquisitions, reasons for not disinvesting a product line

Cost complementarity

• exists when the marginal cost of producing one output is reduced when the output of another product is increased:

Example of specialized investment

An investment in a particular exchange that cannot be recovered in another trading relationship

• Eg. Spending

Between 1870 and 1914, the Second Industrial Revolution transformed global economies, characterized by rapid industrialization driven by the growth of the financial sector and the rise of finance capitalism.

Financial Innovations and Capital Growth

This era saw significant innovations in finance, providing new sources of capital for burgeoning industries:

• Joint-Stock Company: A company formed by individuals who invested by buying shares, receiving a proportionate part of the company’s profits and losses.
• Banks: Financial institutions began to lend money to businesses in return for interest and started investing in shares. These changes fostered a closer union between financial and industrial capital.
• Stock Exchange: A marketplace where shares

Core Accounting Equation Elements

Understanding the fundamental components of a business's financial position:

• Assets: Resources owned by the business that have future economic value, such as cash, land, and equipment.
• Liabilities: Obligations or debts owed to external parties, including loans and accounts payable.
• Equity: The owners' residual claim on the assets after deducting liabilities, comprising common stock and retained earnings.
• Revenue: Income generated from the primary operations of a business, typically from sales of goods or services.
• Dividends: Distributions of a company's earnings to its shareholders.
• Accounts Receivable (A/R): Money owed to the company by customers for goods or services that have been delivered but not yet paid for.