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

Theory of Indifference Curves

Developed by Prof. Thomas S. Alvarez

ECONOMICS AND INDUSTRIAL ORGANIZATION I

Indifference Curves

The table below shows points in four different indifference curves for a consumer.
(a) Draw the indifference curves I, II, III, and IV on the same set of axes.
(b) What are indifference curves?

I II III IV
Qx Qy Qx Qy Qx Qy Qx Qy
2 13 3 12 5 12 7 12
3 6 4 8 5.5 9 8 9
4 4.5 5 6.3 6.3 8.3 9 7
5 3.5 6 5 7 7 10 6.3
6 3 7 4.4 8 6 11 5.7
7 2.7 8 4 9 5.4 12 5.3

(a)

(b) Indifference curves graphically display the tastes and preferences of consumers (in the analysis of utility, the total utility curve introduced consumer tastes). The consumer is indifferent to all the various combinations of X and Y on the same indifference curve... Continue reading "Indifference Curves, Budget Lines, and Consumer Equilibrium" »

Surplus and Deficit Units

Surplus units, or savers, give up consumption now to increase future consumption. Deficit units increase their consumption now but give up their consumption in the future.

Categories of Financial Institutions

1. Banks - Take savings from depositors and make loans.
2. Investment and Merchant Banks - Provide services to corporate and government clients to earn income fees.

Categories of Financial Instruments

1. Equity - An ownership interest in an asset.
2. Debt - A contractual claim to interest payments and payment of principal.
3. Derivatives - A financial instrument that derives its value from a physical market or commodity.

Money Market vs. Capital Market

• Money Market - Issuing and trading short-term securities (less than one year).
• Capital

Introduction

Hello, my name is Tomas Mastronardi. Today I'm going to discuss international trade and two important ideologies: free trade and protectionism. We'll also explore trade wars, global trade tensions, and conclude with a summary of the key arguments.

Free Trade

Free trade promotes the unrestricted flow of goods and services across borders. Proponents argue that removing barriers to trade leads to economic growth, efficiency, and consumer benefits. Free trade agreements, such as the North American Free Trade Agreement (NAFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), aim to reduce trade barriers and promote market access.

Protectionism

Protectionism, conversely, seeks to shield domestic industries... Continue reading "International Trade: Free Trade vs. Protectionism" »

Negotiation Process

Basic Elements in a Negotiation:

• Communication Process: It's the means through which negotiation results are constructed.
• Persuasion: Involves using words, silences (active listening), and gestures.
• Resolving Differences: Different needs enable value creation through idea generation.
• Result-Oriented: Focused on achieving win-win, win-lose, or lose-lose outcomes.
• Formal Process: Each phase contributes to the final result.
• Impacts Relationships: Cooperation positively affects negotiation outcomes.
• Cooperative Attitude: Parties work together for mutually beneficial solutions.

Closing Techniques:

• Summary Close: Summarize key points leading to a logical conclusion.
• Alternative Close: Offer two choices to move the deal forward.
• Artisan Close:

Exercise 1

a) Adaptation

• Product:
  • Pro: Greater local acceptance.
  • Con: Increased production costs.
• Placement:
  • Pro: Improved accessibility.
  • Con: Logistical complexity.
• Price:
  • Pro: Enhanced local competitiveness.
  • Con: Inconsistent brand perception.
• Promotion:
  • Pro: Greater cultural relevance.
  • Con: Higher marketing campaign costs.

b) Standardization

• Product:
  • Pro: Economies of scale.
  • Con: Less adaptation to local tastes.
• Placement:
  • Pro: Logistical simplification.
  • Con: Less market coverage.
• Price:
  • Pro: Brand consistency.
  • Con: Less competitive in some markets.
• Promotion:
  • Pro: More cost-effective global campaigns.
  • Con: Less cultural effectiveness.

c) Suggested Decision

I would recommend a hybrid strategy, adapting key aspects (like flavor and promotion) to local markets while... Continue reading "Adaptation vs. Standardization in Marketing" »

Structure-Behavior-Performance Paradigm

The structure-behavior-performance paradigm, the basis of traditional industrial organization (IO), examines how companies behave within a given market structure. The new IO, however, inverts this logic, starting with how strategic behavior affects market structure. Both approaches agree that market structure influences market outcomes.

Defining Markets

Standard Production Classification

One method to define markets uses standard production classification. This system builds concentration data, but requires classifying multi-product companies. The procedure is:

1. Classify companies by their main product based on sales.
2. Calculate total sales for each market.
3. Calculate market shares and concentration indices.

Companies... Continue reading "Market Structure, Behavior, and Performance: Analysis" »

Steady State in the Solow Growth Model

In the Solow growth model, the steady state refers to a long-run equilibrium where key economic variables (such as capital per worker, output per worker, and consumption per worker) do not change over time. This occurs when the economy reaches a point where the capital stock per worker, k, is constant because investment (savings) equals depreciation, and no additional net investment is happening.

The IS Relation and Goods Market Equilibrium

The IS relation (or IS curve) represents the relationship between the interest rate (r) and the level of output (Y) that ensures equilibrium in the goods market. It reflects the combinations of interest rates and output levels at which the total demand for goods equals... Continue reading "Macroeconomic Concepts: IS-LM, Solow Model, Natural Rates" »

Key Business Acronyms

• CCP: Chinese Communist Party
• OCA: Online Choice Architecture
• EBIT: Earnings Before Interest and Taxes
• CRS: Corporate Social Responsibility
• GPS: Global Positioning System
• COGS: Cost of Goods Sold

Scott Galloway on the Modern Business Landscape

Professor Scott Galloway highlights oil as the most important commodity. However, in the current era, he argues that social media platforms like TikTok are the real deal, although he believes TikTok should be banned due to its links with the CCP, which he considers a tool of espionage.

Innovation Strategies of Supermajors

Supermajors, or large oil and gas companies, are employing innovative strategies such as:

• Emotional Resonance: Engaging users through comments and attractive content.
• Offloading

Business Functions and Logistics

• Core Functions: Administration, Human Resources (HR), Technology, Procurement
• Logistics & Operations: Inbound Logistics, Operations, Sales, Service, Outbound Logistics

Key Information Systems

Enterprise Resource Planning (ERP)

• Integrated system covering: Sales, Production, Finance, HR
• Characteristics: Complex, Costly

Supply Chain Management (SCM)

• Manages: Supply, Production, Distribution
• Covers: Inbound Logistics, Manufacturing, Outbound Logistics
• Focus: Inventory Cost reduction
• Related Concepts: Key Performance Indicators (KPI) for efficiency, Just-In-Time (JIT)

Customer Relationship Management (CRM)

• Types: Operational, Analytical, Collaborative
• Process: Capture customer data, Analysis, Change business processes
• Goals:

International Trade

• Finished Merchandise - Certificate of Manufacture
• Issue - Letter of Credit to Finance
• Arrange Shipment - Bill of Landing
• Warehouse - Customs
• The Flow of Goods - Applied to Imports
• Freight or Cargo - Inspection Shows
• Required Standards - Check the Contents
• The Supplier Provides - The Payment
• The Seller Meets - To Arrange Transport
• The Merchandise at All Times - Most Trade
• Incoterms - Responsible for the Goods
• The Goods to Port - A Quoted Price
• Transport Charges

Shipping

• Cargo Complete
• Consignee
• Contact
• Container Terminal
• Free of Damage
• Free of Charge
• Freight Container
• Guarantee
• Load
• Loss
• Port of Discharge
• Port of Origin
• Quote
• Rates
• Reliable
• Shipper
• Unload
• Vessel
• Volume
• Worldwide

Import and Export

• Advantage
• Buyer
• Ensure
• Export
• Follow-up
• Foreign
• Import
• Investment
• Manage