Notes, abstracts, papers, exams and problems of Economy

Regressive Tax

A regressive tax is a tax that takes a larger percentage of income from low-income earners than from high-income earners. It is the opposite of a progressive tax, which takes a larger percentage from high-income earners. A regressive tax is applied uniformly to all situations, regardless of who is paying.

Regressive Tax vs. Progressive Tax

A progressive tax is a tax whose rate increases as the payer's income increases. The higher the income, the higher the proportion of their income is taxable. A regressive tax is the opposite. Its rate increases as the payer's income decreases. The progressive tax affects high-income earners, while the regressive tax affects the low-income class.

Zero-Based Budget

A zero-based budget is a method... Continue reading "A Guide to Basic Financial Concepts" »

Oligopoly

Oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence. The concentration ratio measures the market share of the largest firms. A monopoly is one firm, duopoly is two firms and oligopoly is two or more firms. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others.

Perfect Competition

• All firms sell an identical product (the product is a 'commodity' or 'homogeneous').
• All firms are price takers (they cannot influence the market price of their product).
• Market share has no influence on prices.
• Buyers have complete or 'perfect' information—in the past,

4.3. Driving Forces and Game Changers

• Employment is a major political concern, but labour productivity is also important.

Labour productivity can be improved by the capital ratio (K/L, machinery to labour ratio), or by rises in total factor productivity (TFP).

Work total factor productivity (TFP) is the product of improvements in technology innovation, human capital, and management competences.

Golden days: 1944-1970. Many technological advances: electricity, internal combustion engine, running water, communications, chemicals, petroleum, etc. This led to the development of knowledge-intensive branches like ICT (Information and Communication Technologies).

Productivity is increasing more slowly since the 1970s than during the Golden Age, in part... Continue reading "Driving Forces and Game Changers: The Transition from Industry to Services" »

Chapter 1: Introduction to Finance

Finance is the study of how and under what terms savings (money) are allocated between lenders and borrowers. Here are some key concepts:

• Real assets: Tangible assets.
• Financial assets: Claims on real assets.
• Flow of savings: Savings flow from households to governments and businesses.
• Financial intermediaries (indirect claims): Invest on behalf of investors (e.g., chartered banks, pension funds, mutual funds).
• Market intermediaries (direct claims): Brokers (e.g., insurance).
• Credit crunch: Financial intermediaries raise loan costs due to an inability to secure financing on reasonable terms.

Crown corporations, like Hydro Quebec, are also major borrowers.

Types of Financial Assets

• Non-marketable financial assets: Invested

Topic 5: Aggregate Planning

Objective

The objective is to meet the forecast demand while minimizing the total cost over the planning period. The planning process determines the quantity and timing of production for the intermediate future.

Requirements for Aggregate Planning

• Measure sales and output
• Forecast demand
• Determine costs
• Schedule decisions for the planning period

Chase Strategy

Match output rates to the demand forecast for each period. Vary workforce levels or vary production rates.

Level Strategy

Daily production is uniform. Use inventory or idle time. Stable production leads to better quality and productivity.

Topic 7: Inventory Management

ABC Analysis

Divides inventory into three classes based on annual dollar volume:

• Class A: High annual dollar

Chapter 10: Competitive Advantage

A firm is said to have a competitive advantage in a market if it earns a higher rate of economic profit compared to the average economic profit in the industry. It is a strategic positioning, the ability to create value and enjoy it over other firms.

Determinants of Profitability

Benefit position relative to competitors and the cost position relative to competitors influence the value created relative to competitors and join with the general industry condition influence the economic profitability. The comparative position of a firm is an important determinant of profit.

Components of Value Creation

Value Created = Firm Profit (or Producer Surplus) + Consumer Surplus = Consumer Benefit - Cost = B - C = CS + PS

Measures

Government Favorability

Local > State > Federal. Government favorability has been on a decline since 2001.

Participation Correlation

• High Participation: Elections with high participation rates, a strong mayor form of government, and elections held concurrently with state and national elections.
• Large Cities: Culturally diverse cities.
• Controversial Topics: Low participation, the opposite of high participation.

Types of Local Governments

Numbers of Local Governments:

• The number of Special Districts has been on the rise.
• The number of School districts has decreased.
• The number of Municipalities, Townships, and Counties has stayed the same.

Functions of Local Governments

• Municipal: Woven throughout the others.
• County governments: Primarily for governing

6. Can corruption be beneficial to the economic performance? Some studies have suggested that corruption may be beneficial for the economy. Positive correlation between corruption and economic growth in Asian countries:

• Bureaucrats do not have enough information or are not competent for taking decisions; corruption can result in a competitive sale.
• Innovative and expensive projects have been created through corruption of capital.

7. Possible solutions:

• Access to information / right to information (Transparency)
• Cooperation between Governments (common database)
• Code of Conduct (education on legal base)
• Reveal Information (protected by law and incentives)

Informal Economy:

1. Definition: Set of economic activities, enterprises, jobs, and workers that are

Understanding Corporate Structures

Diversification: This occurs when a company offers new products and attempts to enter new markets.

Holding: A parent company buys the shares of its subsidiaries, making the parent the owner. The parent company makes the most important decisions, holding the majority of shares and votes.

Trust: The subsidiaries are the owners of the shares, so the profits are shared among each company. The management of the shares is handled by a board of directors. The companies produce the same or similar products, with the objective of growing as a company and becoming more competitive.

Cartel: Companies that produce the same product sign an agreement to reduce competition. They agree to sell the product at the same price and... Continue reading "Understanding Corporate Structures: Diversification to Transnationals" »