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

Partnership: A Case Study of Diamond

Introduction

A partnership is a business arrangement where two or more companies share profits and liabilities. It can offer both advantages and disadvantages.

Advantages of Partnership

Pros

• New Perspectives and Knowledge: Partnerships can bring in new ideas and expertise, helping companies take their products to the next level.
• Easier Market Entry: Partnerships can provide credibility and local knowledge, making it easier to establish a business in new countries.
• Increased Capital: Partnerships can provide access to more capital for potential investments.

Disadvantages of Partnership

Cons

• Shared Control: Partnerships require sharing control, which can be challenging.
• Disclosure of Secrets: Partnerships can lead to

The aging of the Canadian population will strongly influence our economy. Social policies need to be re-evaluated and insurance coverage needs to be properly addressed. Mortality rates are trending upwards for all age groups.

Sandy is a financial planner. She uses statistics to illustrate the importance of life insurance for her clients. The total number of deaths per year among the Canadian population is decreasing.

Victoria and Rafael are both in their late fifties. Victoria has a part-time retail job and Rafael is currently employed as a carpenter and expects to get full CPP benefits when he retires.

Tyler and Suzie follow their financial planner's advice and implement some risk control strategies. Which of the following strategies does not

Overview: P&C - Property & Casualty

Portfolio of Leading Businesses: Commercial

• Global leader in P&C coverage for businesses of all sizes
• #1 commercial lines insurer in the U.S.

Portfolio of Leading Businesses: Consumer

• Global leader in personal accident and health insurance
• Large personal lines provider globally
• International life insurer focused on Asia

Exceptional Service

• Renowned for service excellence
• Recognized and admired brand

Local Presence Globally

• Operations in 54 countries and territories
• 31,000 employees
• Help clients manage their risks anywhere in the world

Product and Distribution

• Industry-leading P&C products for consumers/businesses

Financial Strength

• Financial strength – AA (S&P) and A++ (Rating Agencies)
• $199.1 billion

Comprar por Internet: Ventajas

No need to queue to buy.

Access to stores and products in remote locations.

It is possible to offer and find a lot of options.

Online stores are available every day at all hours.

Reduction of personnel expenses.

No need to handle cash.

Desventajas

Lack of communication and personal relationship.

Impossibility to try the product before buying it.

It is necessary to have a secure Internet connection.

It is essential to have a device from which to connect to the Internet.

Fear of fraudulent payments, scams, and theft of personal information (hackers).

Difficulty or even inability to detect scams and scammers.

Absolute dependence on the Internet.

Discomfort for returns.

Conclusion

The advantages of buying online outweigh the disadvantages,... Continue reading "Advantages and Disadvantages of Online Shopping" »

Functions of Money

1. Store of value

2. Medium of exchange

3. Unit of account

Changes in banking laws

Transactions demand to money is closely related to money functioning as medium of exchange

Primary purpose of the legal reserve ratio: provide a means by which the monetary authorities can influence the lending ability of commercial banks.

Money is destroyed when loans are paid off

Securities held as assets by the Federal Reserve Bank consist mainly of Treasury bills and Treasury bonds

What happens when FRB buys bonds from public in open market and amount held by the public doesn't change: Commercial bank reserves will increase

When central bank borrows from FRB, the commercial bank's lending ability is increased.

The simple multiplier 1/mps

Reserve ratio... Continue reading "Functions of Money and Monetary Policy: A Comprehensive Overview" »

Concept of Business

Business refers to those economic activities involving the purchase, production, and/or sale of goods and services with a motive of earning profit by satisfying human needs in society.

Characteristics of Business

• An Economic Activity: Business is considered an economic activity as it is undertaken with the objective of earning money.
• Production or Procurement of Goods and Services: Business includes all the activities concerned with the production or procurement of goods and services for sales. Services include transportation, banking, insurance, etc.
• Sale or Exchange of Goods and Services: There should be a sale or exchange of goods and services between the seller and the buyer.
• Dealing in Goods and Services on a Regular Basis:

Introduction

Capitalism, when faced with a crisis, tends to restructure itself. New technologies, organizational forms, modes of exploitation, types of jobs, and markets emerge to create new ways of accumulating capital.

The Rise of the Cognitive Economy

The dominant narrative in advanced capitalist countries has been one of change, particularly focusing on the rise of technology: automation, the sharing economy, and the internet of things. Theorists argue that these changes have led to a cognitive, informational, or knowledge economy.

Data as the New Raw Material

A key argument of this chapter is that in the twenty-first century, advanced capitalism has come to be centered upon extracting and using a particular kind of raw material: data. Data... Continue reading "Data Capitalism: The Extraction and Exploitation of Raw Data in the 21st Century" »

Understanding Economies of Scale

Economies of scale refer to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing as the scale increases, because fixed costs are spread out over more units of output.

Types of Economies of Scale

Economies of scale can be broadly categorized into external and internal types, each offering distinct benefits to businesses.

External Economies of Scale: Skilled Labour Pools

When an industry is concentrated in a particular area, it often leads to a significant build-up of skilled labour. This means that businesses can readily find workers with the specific skills and work experience required by that industry. As a result:

• Training costs are lower

Income Statement: Financial Performance

Measures a company's financial performance over a specific period of time.

• Revenue: First amount on right (credit)
• Expense: Second amount on left (debit)
• Revenues - Expenses = Net Income
• If net income is negative, it is called a Net Loss.
• Net income is allocated to either Dividends or Retained Earnings.

Retained Earnings: Company Profits

Represents the portion of net income that the firm has kept (as opposed to paying out as dividends).

• Ending Retained Earnings (ERE) = Beginning Retained Earnings (BRE) + Net Income (NI) - Dividends
• In a Statement of Stockholders' Equity, it would include common stock: ERE = BRE + Common Stock (Owner Contribution) + NI - Dividends

Balance Sheet: Financial Position Snapshot

Reports... Continue reading "Financial Statements & Core Accounting Principles" »

Classical Economics: Flexible Prices and Wages

The statement that prices and wages are flexible is central to the self-adjustment perspective of classical economists. This flexibility extends beyond product markets to factor markets, particularly labor.

If some workers temporarily face unemployment, they would compete for jobs by offering their services at lower wages. As wage rates declined, producers would find it more profitable to hire additional workers. Ultimately, classical economists believed that flexible wages would ensure that everyone who desired a job would be employed, leading to full employment in the long run.

Say's Law: Production and Demand

Description of Say's Law

Say's Law posits that the key to economic growth is not increasing... Continue reading "Economic Principles: Classical Self-Adjustment, Say's Law, and Business Cycles" »