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

Understanding Credit, Debt, and Insurance

Credit Rule of Thumb: Product should outlive its payment; don't use credit if the purchase is beyond earnings capability.

Factors That Influence Credit Score:

• Billing history (35%)
• Length of bill payment history (15%)
• Amount owed (30%)
• New credit lines (10%)
• Types of credit (10%)

FICO Score:

300-850; above 800 is great; below 620 is not good (high risk); 40% of Americans have a score under 600.

Credit Bureaus:

TransUnion, Equifax, Experian (each has its own credit score).

Types of Entries in a Credit Report:

• Identifying Info
• Public Records (bankruptcies, civil judgments, and tax liens)
• Inquiries
  • Soft Inquiries (i.e., a credit

Understanding the Marketing Environment

Actors and Forces Shaping Marketing Success

A company's marketing environment encompasses the actors and forces beyond marketing that influence marketing management's capacity to cultivate and sustain successful relationships with target consumers. Companies must vigilantly monitor and adapt to the ever-changing environment. The marketing environment comprises two key components:

• Microenvironment: This includes actors close to the company that impact its ability to engage and serve customers effectively.
• Macroenvironment: This consists of broader societal forces that shape the microenvironment, including demographic, economic, natural, technological, political, and cultural factors.

The marketing environment... Continue reading "Understanding Marketing Environment and Consumer Behavior" »

Chapter 7: Business Accounting

What are Accounts and Why are They Necessary?

Accounts are financial records of a firm's transactions that are kept up to date by accountants, who are qualified professionals responsible for keeping accurate accounts and producing the final accounts.

Every end of the year, final accounts must be produced, which give details of:

• Profits and losses made
• Current value of the business
• Other financial results

Limited companies are bound by law to publish these accounts, but not other businesses.

Financial Documents Involved in Buying and Selling

Accountants use various documents that are used for buying and selling over the year for their final accounts. They can help the accountant to:

• Keep records of what the firm bought and

Economic Boom and the Great Depression

A period of general prosperity in the 1920s ended with the collapse of the Great Depression in the 1930s.

Key Factors and Events

• Bull Market: A stock market in which stock prices were steadily increasing. In the bull market of the 1920s, stock prices became vastly inflated.
• Buying on Margin: Purchasers were able to buy stocks on margin, putting only 10% down and borrowing 90%.
• Speculation Boom: Refers to the practice of buying real estate, stocks, or anything else to sell later at a profit.
• Black Tuesday: The market crash on October 29th.
• Smoot-Hawley Tariff: Reduced international trade.

Key Figures and Groups

• Herbert Hoover: Republican who believed in Laissez-faire economics. He did not think the federal government

Benefits of eMarketing Over Traditional Marketing

Demographics and Targeting

Internet users represent a desirable demographic for marketers, often possessing greater buying power and skewing towards the middle class. The internet's structure allows users to organize into focused groups, providing marketers easy access to niche markets. This targeted approach maximizes the effectiveness of marketing messages.

Adaptivity and Closed-Loop Marketing

Closed-loop marketing relies on constant measurement and analysis of marketing campaign results. Real-time analysis of responses allows for continuous adjustments, minimizing wasted advertising spend. This dynamic approach, combined with the internet's immediacy, allows for maximum marketing efficiency... Continue reading "The Power of eMarketing" »

European Union Energy Market Regulations

1st package- Directives 96.92 concern common rules for the internal market in electricity and 98.30 internal market of natural gas. Liberalization was to be progressive, applying gradually to different categories of consumers. Introduce a partial opening of national markets to competition, both required liberalization of certain segments of their electric and gas markets to enlarge. 2nd- 2003.55-54 liberalization process took place at different speeds in different member states aiming at the creation of an internal market. Required national gas and electric markets to be liberalized for large consumers by 2004 and 2007, respectively. 3rd- Directive on electric, on gas, security of supply electric, regulate... Continue reading "European Union Energy and Financial Market Regulations" »

Parent > Subsidiaries: Gain

Proceeds from Sale (Cost)

Carrying Amount of Plant Sold (Capital Proceed)

Plant (Profit)

DTA (of Profit)

Income Tax Expense (of Profit)

Accumulated Depreciation (of DTA)

Depreciation Expense (of DTA)

Income Tax Expense (of Dep)

DTA (of Dep)

Years After Sale

Retained Earnings (Profit x 0.70)

Plant (Profit x 0.70)

Subsidiaries > Parent: Gain

Plant (Profit)

Proceeds from Sale (Cost)

Carrying Amount of Plant Sold (Capital Proceed)

Income Tax Expense (of Profit)

DTL (of Profit)

Depreciation Expense (of DTA)

Accumulated Depreciation (of DTA)

DTL (of Dep)

Income Tax Expense (of Dep)

Payment Methods

• Online shoppers commonly use a credit card or a PayPal account in order to make payments.
• Other alternative ways:
  • Billing to mobile phones
  • Cash on delivery
  • Check
  • Debit card
  • Electronic money
  • Gift cards
  • Postal money order
  • Invoice

Product Delivery

• Downloading (for music, movies, images…)
• Drop shipping (the manufacturer ships the item directly to the consumer)
• In-store pick up (going to a real shop)
• Printing or by e-mail (ticket for a concert, cinema, etc…)

Advantages

• Convenience: Online shops are usually available 24 hours a day and many consumers have internet access both at work and at home.
• Information and reviews: Online stores give more information about the product (instructions, demonstrations, advice or how-to guides). Customers can

Production and Productivity

Production is the provision of a product to satisfy wants and needs. The process involves businesses adding value to their products. Productivity: is the outputs measured against the inputs used to create it. This is measured by: Output (over a given period of time)/Number of employees If a worker makes more products in the same amount of time, his productivity increases. Firms aim to be productively efficient to be able to make more profits and compete against their competitors.

Methods of Production

Job production: Goods are made individually, by one person. Goods are usually specialized, no two goods are the same. Usually made to order. Pros: The product meets exact requirements of the customer. The workers have... Continue reading "Understanding Production and Methods of Production" »

The Great Depression: The Longest and Deepest Economic Downturn in American History

Causes of the Great Depression

In 1929, the prevailing economic theory held that the economy possessed self-correcting mechanisms that would prevent a severe depression. However, the Great Depression defied these expectations.

• Overproduction: Some economists believed the depression was caused by an excess of goods and services.
• Lack of Investment Opportunities: Others pointed to a decline in profitable investment opportunities.
• Technological Innovation: Joseph Schumpeter argued that the failure of entrepreneurs to introduce new products contributed to the depression.
• Stock Market Crash and Bank Panics: The stock market crash of 1929 and subsequent bank failures exacerbated