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

Fixed Costs

Expenses that do not change as a function of the activity of a business, within the relevant period.

Price-Elastic Demand Curve

When the price goes down a little, volume increases significantly. When the price goes up a little, volume decreases significantly. Many grocery items are price elastic.

Price-Inelastic Demand Curve

Volume does not change much, even with significant price changes. Products like critical raw materials, electricity, and heart pacemakers are price inelastic.

Tactical Pricing

Tactical pricing is the ongoing stream of pricing decisions the firm makes daily.

Pricing Toolkit

A set of pricing tactics for the firm to change a product's price.

Vision

A description of an ideal future state; an impressionistic picture of what... Continue reading "Key Business Concepts: Pricing, Control, and Performance" »

The Depression led to a loss of confidence in the economic future and major political changes. In the 1932 presidential election, Franklin D. Roosevelt (Democrat) swept to a landslide victory over Herbert Hoover (Republican). FDR argued that the Depression was due to faults in the capitalist economy and proposed government intervention to remedy the situation. FDR had been confined to a wheelchair since an attack of polio in 1921, and his long battle to rebuild his career had deepened his empathy with human suffering. He was the first president of the radio age and understood the importance of transmitting confidence.

The New Deal programs (1933-39) aimed to stabilize the economy, regulate commercial institutions, create internal demand, and... Continue reading "The New Deal Era: Government Intervention and Economic Stabilization" »

GNP/GDP 4 elements:

Developing Export Strategy

Companies develop this strategy when customers in other countries request their goods.

Step 1: Identify a Potential Market

A company should conduct market research and analyze the results. Example: ART BRZ

Step 2: Match Needs to Abilities

Determine whether the company can meet the needs of the market. Example: Air conditioning

Step 3: Initiate Meetings

Build trust and develop a cooperative environment among all parties. Example: Arizona Companies

Step 4: Commit Resources

Allocate the company's human, financial, and physical resources to the project.

Export/Import Financing

1. Open Account

Export/Import financing where an exporter ships merchandise and later bills the importer for its value. Example: MGT briefcase

2. Advance Payment

Export/... Continue reading "International Business Strategies: Exporting, Financing, and Entry Models" »

Inflation and Deflation

Inflation is an increase in prices, reducing purchasing power. It occurs when the price of goods and services rises faster than salaries. Consequently, demand falls, leading to reduced production and a decrease in GDP.

Deflation is when prices fall more than wages. This leads to increased demand, increased production, and a rise in GDP.

World Trade Dynamics

World Trade Without Restrictions

• Higher prices
• Fewer consumer choices

World Trade With Restrictions

• Protection of national defense and citizen health
• Protection against dumping. Dumping occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
• Potentially lower prices for consumers

Business Markets & B2B Buying Behavior

Understanding Business Markets

Business buyer behavior refers to the buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

Business buying process is the process where business buyers determine which products and services are needed to purchase, and then find, evaluate, and choose among alternative brands.

Market Structure & Demand

Business Decision Process Characteristics

• More complex
• More decision participants
• More professional purchasing effort
• Buyer and seller more dependent

Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable... Continue reading "Business Markets & B2B Buying Behavior Explained" »

launch/introduce/roll out a product ≠ withdraw a product

Types of Taxes

• Income Tax: A percentage of individual earnings filed with the federal government.

• Corporate Tax: A percentage of corporate profits taken as tax by the government to fund federal programs.

• Sales Tax: Taxes levied on certain goods and services.

• Property Tax: Based on the value of land and property assets.

• Tariff: Taxes on imported goods, imposed to strengthen domestic businesses.

• Estate Tax: A rate applied to the fair market value of a property at the time of death.

Understanding Tax Fraud

Tax fraud involves failing to pay the government (e.g., town council, provincial government) the taxes corresponding to income or benefits obtained during a specific period.

• Tax Evasion: Involves concealing income (either domestically or in other countries,

Incoterms: Understanding Responsibility and Risk in International Trade

Exam Questions

GDP

GDP fails to measure changes in "the quantity of existing products that don't cause a change in price". Whenever there is inflation, the increase in nominal GDP will overstate growth in the economy

True

Unemployment

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US unemployment rate?

Increases

Assume the US unemployment rate is 4.9%. If 10,000 working age immigrants enter the country all looking for work and 9.000 find a job, what happens to the US labor force participation rate?

Increases

A recent college graduate who is still looking for their first job would be considered as

Unemployed

The eligible population is: 200,000. Employed: