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

Government's Role in the Economy

One of the roles of most governments is to provide a range of public services. This might include:

• Healthcare
• Education
• Defence
• Care for the elderly
• Child protection
• Policing
• Refuse collection
• Judicial system
• Transport networks

Taxation and Fiscal Policy

The money raised from taxation is used by a government to help fund its spending on public services. Businesses and individuals pay taxes.

Types of Taxation

• Indirect Taxes: Levied on spending, e.g., Value Added Tax (VAT) paid when buying goods and services.
• Direct Taxes: Charged on income, e.g., income tax, corporation tax.

Fiscal Policy Defined

Fiscal policy involves using changes in taxation and government expenditure to manage the economy.

Government Influence on Business

What is Net Worth and Why is it Important for Businesses?

Net worth represents the difference between a person's or corporation's assets and liabilities. It serves as a crucial indicator of a company's financial health, offering a snapshot of its current financial standing.

Understanding Your Net Worth

Knowing your net worth is essential as it helps identify areas of excessive spending. The ability to afford something doesn't necessitate its purchase. To prevent unnecessary debt accumulation, differentiate between needs and wants before making purchases.

Exploring the SEIS Program

The Seed Enterprise Investment Scheme (SEIS) is a UK government program designed to assist startups in raising capital. It aims to stimulate economic growth by promoting... Continue reading "Understanding Net Worth and Its Importance for Businesses" »

inequality:the unfair situation in society when some people have more opportunities,money, etc. Than other people:

global village:The term global village represents the simplifying of the whole world into one village through the use of electronic media.

MEDC:A developed country (MEDC) is a rich country.

LEDC:A developing country (LEDC) is a poor country.

fair trade:comercio justo(trade between companies in developed countries and producers in developing countries in which fair prices are paid to the producers.)

conflict-mineral:(Especially in Africa) A mineral mined in an area of armed conflict and traded illicitly to finance the fighting.

economic development:Economic development is the process by which a nation improves the economic, political,

Dual Income Tax System

This system levies a proportional tax rate on all net income (capital, wage, and pension income less deductions) combined with progressive tax rates on gross labor and pension income.

Implemented in Denmark, Finland, Norway, and Sweden, the dual income tax (DIT) system was introduced for reasons of economic efficiency, net-wealth tax, and a broader tax base.

Key features:

• Capital incomes are taxed at a lower rate.
• Acts as a hybrid model between income and consumption concepts (interest-adjusted income tax).
• All income and profit are divided into capital income (proportional/flat rate) and labor income (progressive rate).
• Features the lowest personal income tax (PIT) percentage on labor income.

Dividend Taxation

Corporate tax systems... Continue reading "Dual Income Tax & Dividend Taxation: A Comprehensive Guide" »

Factors Influencing Business Ownership Structure

Key Determinants of Legal Status

• Growth: Many businesses start small and gradually expand. Most businesses change their legal status as they grow, primarily to raise more capital.
• Size: Small businesses typically operate as sole traders or partnerships. Public limited companies (PLCs) are much larger, often having thousands of employees and huge turnovers.
• The Need for Finance: Finance is a primary reason owners change their business's legal status. Changing the organizational structure is often the only way to secure significant additional funding.
• Control: Some owners value independence and complete control over the business. This preference often leads them to remain sole traders.
• Limited Liability:

Fundamentals of Marketing Management

The role of the Marketing Manager involves strategic decisions regarding Market Share, focusing on the core elements of the Marketing Mix: Product, Price, Promotion, and Place.

The Evolution of Marketing Eras

• Production Era (Pre-1920s): Goods were scarce; buyers accepted what was available. (Approx. XIX Century to 1920)
• Sales Era (1920 to 1960): Increased production necessitated aggressive selling to move products out.
• Marketing Concept Era (1960 to Present): Focus shifted to satisfying customer needs and delivering value.
• Customer Relationship Era (1990 to Present): Emphasis on satisfying high customer expectations and building long-term relationships.

Strategic Decision Making

Key components of strategic decision... Continue reading "Marketing Strategy Fundamentals: Eras, Data, and Consumer Decisions" »

Economics

Definition

Derived from the Greek word ‘oikonomos,’ meaning “one who manages a household,” economics studies how societies allocate scarce resources to satisfy unlimited wants and needs.

Core Principles

1. Trade-offs: Acquiring something necessitates forgoing something else (e.g., watching TV versus studying).
2. Opportunity Cost: The cost of something is the value of the next best alternative forgone.
3. Marginal Thinking: Rational individuals make decisions by comparing the additional benefits and costs of an action.
4. Incentives: People's behavior is influenced by incentives, such as price changes (e.g., lower prices may increase consumption).
5. Benefits of Trade: Specialization and trade allow individuals and nations to achieve higher levels

Understanding Call and Put Options

A call option grants the owner the right to purchase a specified financial instrument for a specified price (the exercise price) within a specified period of time.

Option Moneyness Definitions

The relationship between the market price of the underlying security and the exercise price determines if an option is "in the money" or "out of the money."

• A call option is in the money when the market price of the underlying security exceeds the exercise price.
• A put option is in the money when the exercise price exceeds the market price of the underlying security.
• A put option is out of the money when the market price of the security exceeds the exercise price.

Managing Option Positions

Sellers (writers) of call options can... Continue reading "Mastering Options Pricing and Capital Market Theory Concepts" »

International Marketing

Key Concepts

Market Potential

The total number of units of a product that could be sold by all companies in a specific international market.

Sales Potential

The percentage of market potential a specific company expects to sell in a specific international market.

Market Types

Industrial Market

Companies purchasing equipment and machinery.

Consumer Market

Represents over 50% of GDP in developed countries.

Government Market

Similar to industrial markets, but focused on major projects.

Marketing Strategies

Marketing Research

Collects information at a specific time to aid marketers' decisions.

Standardization

Using the same marketing strategies internationally as domestically.

Adaptation

Using different marketing strategies internationally... Continue reading "International Marketing and Production Strategies" »

Neoclassical Theory of Migration

This theory incorporates both macro and micro perspectives. It is fundamentally based on principles such as rational choice, maximizing advantages, income differentials, and net benefits.

Macro-Level Perspective

At the macro level, migrations occur due to differences in the supply and demand of labor across various locations, directly associated with wage disparities. Workers tend to move to places where salaries are higher.

Micro-Level Perspective

At the micro level, the neoclassical theory posits that individuals migrate after rationally considering the costs and benefits of the move. Therefore, it is the differentials in expected incomes and benefits—rather than merely salary differences—that motivate people... Continue reading "Understanding International Migration Theories" »