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

Dear Mr. Stevens

I am responding to your letter of 10^th August in which you inquired about one of our business partners.

Sorry for not being able to provide you with the requested information as it would be a breach of trust.

However, if you can ask the company to contact us and provide instructions on how to act as your intermediary, we will be able to assist you.

Yours sincerely

Dear Mr. Scutton

I am responding to your inquiry about the company mentioned in your letter of 3^rd May.

In the past, we extended credit to that company for a lesser amount than you mentioned, and we need to send them a payment reminder before they settle the debt.

This information is strictly confidential, and we take no responsibility for its use.

Yours sincerely

Essential Business Terminology

Unique Selling Proposition (USP)

That which separates your product from the competition.

ROI (Return on Investment)

How much money you make versus your initial investment.

Overhead

The indirect costs associated with running a business, often related to administration, marketing, and maintenance. These costs are not associated with product manufacturing or service delivery.

Profit

Total revenue minus total cost.

Revenue

Income generated before deducting expenses.

Liability

A financial debt, risk, or obligation. Liabilities include mortgages, outstanding loans, and accrued expenses.

Research and Development (R&D)

Activities related to investigating and creating new products.

Logistics

The processes involved in managing and... Continue reading "Key Business Terms & Academic Task Structures" »

Sustainable Design and Financial Strategies

High-Value, Eco-Conscious Products

Our updated designs reflect strong values. Despite higher prices, customers choose our products due to our commitment to environmental responsibility.

Cost Structure

This section outlines key financial considerations for various business models.

Fixed Costs:

• Salaries
• Utilities (electricity, water)
• Facility rent
• Machine operation costs

Variable Costs:

• Materials
• Services (transportation, website maintenance)

Revenue Streams

We generate income through direct sales from our home base, utilizing recycled materials and a bootstrapping approach.

Innovative Local Marketing Strategies

Connecting with the Community

1. Catchy Viral Trends: Leverage trending websites and topics.
2. Local Partnerships:

Supporting Sentences

Supporting sentences either explain or prove the topic sentence. They provide details and summarize what has been said, particularly towards the end of the paragraph. Supporting details could be examples, statistics, or quotations.

About the Essay Topic

The essay topic should be focused:

• It doesn't have to be too general or too narrow.
• The title should be a noun phrase, not a sentence or a non-clause; it can contain a gerund, but not a true verb.
• It should indicate the narrow topic of the paper.
• It shouldn't be ambiguous and use only standard English word forms.
• It should summarize the main idea.

Drafting

Freewriting

Freewriting is writing about a topic, focusing on identifying main ideas, supporting points, etc.

Other Techniques

• List-

Economic Interest Groups (EIGs) Explained

Definition of Economic Interest Groups

An Economic Interest Group (EIG) is a collective of natural or legal persons who share common commercial and financial interests, coordinating their activities to achieve a specific shared objective.

EIGs Versus Collusion: Key Differences

• Collusion: Independent companies agree on price increases or other anti-competitive actions.
• No Collusion: Companies are part of the same holding or Economic Interest Group (EIG).

Types of Economic Interest Groups

There are two primary classifications:

• De Jure: A legally binding union, often established through a mercantile act or formal agreement.
• De Facto: An informal arrangement, often based on family relations or effective coercion.

TOPIC 4: PRICING

The Role of Price in Marketing

Price plays a crucial role in generating revenue, establishing a company's desired value proposition, influencing buyer decisions, and reflecting the competitive landscape. It is a dynamic element that can be easily adjusted to define market share and respond to competitor actions. Pricing decisions may involve various levels of management, from executives in small businesses to dedicated teams in larger corporations.

4C's Model of Pricing

The 4C's model considers four key factors that influence pricing decisions:

• Corporation: The company's overall objectives, costs, and profit margins.
• Consumer: Customer demand, price sensitivity, and perceived value.
• Competitors: Competitor pricing strategies and market

The IRPF (Personal Income Tax) is proportional and progressive, meaning that those who earn more, pay more. This is based on tax brackets applied to the taxable base.

Business Aspects: Partnerships, Capital, and Taxation

Key considerations include the number of partners, minimum capital requirements, type of liability, and taxation. It is generally more beneficial to optimize tax strategies.

Freemium Business Model

Freemium is a pricing strategy where a product or service is provided free of charge, but users are charged for additional features, services, or virtual/physical goods. This model has been used in the software industry since the 1980s. A subset used by the video game industry is called free-to-play.

Example: The accountingtools.com website... Continue reading "Understanding IRPF, Freemium, and Marketing Strategies" »

Adam Smith's Core Economic Principles

Adam Smith was a Scottish economist during the 18^th century. In 1776, he published his most influential book, The Wealth of Nations, where he made the first comprehensive examination of the emerging market capitalist system. He laid the foundations of classical free-market economic theory and developed the concept of division of labor. Smith explained how rational self-interest and competition can lead to economic prosperity.

Elements of Commercial Society

Adam Smith addressed two fundamental economic questions: the growth of wealth and its distribution. He provided an analysis of the relationship between three key elements of commercial society:

• Factors of production
• The market
• The state

From this framework,... Continue reading "Adam Smith's Economic Theories: Foundations of Free Markets" »

Unit 1.6: Growth and Evolution

Economies of Scale

• The long-run average costs fall as more output is produced.
• The idea of getting bigger is cheaper.
• When the costs of a business go down as the business grows.

Internal Economies of Scale

• Purchasing: The price is lower if you buy in large quantities.
• Financial: Big businesses are seen as less of a risk than smaller businesses.
• Managerial: They have specialized managers in the different areas which brings costs down as efficiency rises.
• Technical: Only big businesses can afford to buy the best technology, which in the long run brings down costs.
• Marketing: Large-scale businesses are the ones who can afford and spread the cost of the most effective and expensive types of marketing.

External Economies of Scale

• Consumers:

Understanding Terms of Trade (TOT)

TOT Definition and Calculation

The Terms of Trade (TOT) is an economic indicator that measures the relative prices of a country's exports in relation to its imports. It quantifies the amount of imports a country can obtain per unit of its exports.

The formula for calculating TOT is:

TOT = (Average Price Index of Exports / Average Price Index of Imports) x 100

Interpreting Changes in Terms of Trade

Changes in the TOT indicate shifts in a country's purchasing power in international trade:

• TOT Improves / More Favorable: This occurs when export prices rise relatively to import prices. The country is then able to exchange the same amount of exports for a greater quantity of imports. This generally signifies an increase