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

Compensation

Rewards earned by employees in return for their labor

Direct Financial Compensation

Consisting of pay received in the form of wages, salaries, bonuses, and commissions provided at regular and consistent intervals

Indirect Financial Compensation

Including all financial rewards that are not included in direct compensation and understood to form part of the social contract between the employer and employee such as benefits, leaves, retirement plans, education, and employee services

Equity Theory

States that a person’s motivation is in proportion to the perceived fairness of the rewards he or she receives for the amount of effort he or she exerts, and that this is also compared with what others receive. According to the theory, individuals

The Labor Market: Topic 5

History of Labor Market Regulation

Post-WWII: The Golden Age of Collective Bargaining

Following World War II, Europe and the USA experienced a golden age of collective bargaining.

• The Golden Rule: The increase in wages must keep pace with the increases in productivity.

Labor Regulation in Spain

The Spanish labor market evolved significantly, moving from the dictatorship era to the Moncloa Pacts and the subsequent Estatuto de los Trabajadores (Workers' Statute).

The International Labour Organization (ILO)

Spain joined the ILO in 1951. Founded in 1919 and controlled by the UN, the ILO addresses employment and labor relations. It is a tripartite governance structure composed of government representatives, unions, and employers.... Continue reading "Global Labor Market Dynamics: History, Theories, and Welfare Models" »

The Market

Producer and Consumer Markets

The market is the space where sellers and buyers meet to achieve their objectives. In consumer markets, the consumer buys the product for consumption. However, when products are sold for use in the production process, this is known as a producer market.

Market Segmentation, Targeting, and Positioning

Definition of Segmentation

Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively.

Segmentation Methods

A market segment is a group with similar needs and wants. There are various ways in which a market may be segmented, including:

• Geographic Segmentation: This focuses on the impact of factors such as the location of customers

Chapter 1 & Chapter 2

◦The production possibilities curve shows the maximum quantity of goods and services that can be produced when the existing resources are used fully and efficiently.

Chapter 3

Demand Curve/ Supply Curve

1. Movement along the curve (Change of Quantity Demanded/ Quantity Supplied): Price of this product (Demand Law / Supply Law)

• Demand is the amount of a product that people are willing and able to purchase at each possible price during a given period of time.
• The quantity demanded is the amount of a product that people are willing and able to purchase at one, specific price.

Law of Demand

As price of a good rises, consumers buy less. As price of a good falls, consumers buy more. Depicts the inverse quantity-price relationship... Continue reading "Understanding Demand and Supply in Economics" »

Global Product Structure: Advantages

• Global vision
• Resource leverage
• Strategic focus
• Simplicity
• Accountability
• Standardized product introductions
• Enhanced speed and decision quality
• Self-contained product development and introduction
• Development of talent
• Low interference from other divisions

Disadvantages

• Limited cooperation, communication, and sharing of information between divisions
• Costly to maintain
• Duplicated functions

International Division Structure

Focus: Focuses on domestic business by shifting all foreign operations into a semi-independent division. This structure evolved out of the growing scope of international activities and a realization that foreign markets often offered the most promising growth opportunities.

Characteristics of International

Question 2 Analysis

(a)(i) Calculating Average Cost

Total costs = €1300

No. of kilos = 130

Average cost per kilo = €1300/130 = €10

(a)(ii) Calculating Profit

Total Revenue (TR)= 130 x €30 = €3900

Total Cost (TC) = €1300

Profit (TP or P)= €3900 -€1300 = €2600

(a)(iii) Identifying Variable Costs

B Variable costs

(a)(iv) Explaining Variable Costs

Variable costs change as production changes. For example, more sugar is needed as more sweets are produced.

(a)(v) Calculating Fixed Costs

Fixed costs = rent + insurance = €500 + €50 = €550

(a)(vi) Explaining Fixed Costs

Variable costs vary with output, so when output is zero, no variable costs are incurred.

(a)(vii) Limitations to Firm Growth

Lack of finance is the most important limitation to... Continue reading "Cost Analysis, Market Structures, and Business Growth in the Confectionery Industry" »

Axioms Determining Indifference Curve Shape

Six fundamental axioms determine the shape and properties of indifference curves:

1. Completeness: Individuals can compare and rank any two market baskets (A or B, or indifferent between A and B).
2. Transitivity: Guarantees the logical consistency of the ordering among any set of market baskets (If A is preferred to B, and B is preferred to C, then A is preferred to C).
3. Non-Satiation (More is Better): Market baskets with higher quantities (q) are always preferred.
4. Continuity: Market baskets in the same indifference set are distributed continuously.
5. Strict Convexity: Indifference curves are always strictly convex with respect to the origin of coordinates.
6. Smoothness: Indifference curves are smooth, lacking any

Quiz 8: Product Development & Distribution

1. The ______ step is the process of conducting market research on a potential product when engaging in the Product Development/Design process. EVALUATE

2. The CYL Yoga Studio is opening soon and needs to set up their product categories. All of the following will be labeled in the goods category EXCEPT: YOGA RETREATS

3. The Distribution Model represents all of the following EXCEPT: the flow of internationalization

4. ______ Model considers the logistics of having the right product in terms of the flow of information, innovation, compensation, and transaction costs. Miyazaki’s Distribution Approach

5. The ______ step is the process of determining the feasibility for a potential product when engaging in the Product

Market Research: Primary and Secondary

What is market research?

Market research is the process of gathering, analyzing, and producing data relevant to the marketing process, such as the size of the market, key market trends, or characteristics of customers. Market research can identify the reasons for buying a product and customers’ wants. It provides a manager with information for effective decision-making. The objective of market research is to meet consumers’ needs more effectively.

Primary and Secondary Market Research

Primary market research gathers data for the first time for a specific purpose and is conducted face to face with customers. It can be tailored precisely to your own needs but can be expensive and time-consuming. Mistakes... Continue reading "Market Research: Primary, Secondary & Product Life Cycle" »

Price Ceilings: Market Intervention

A price ceiling is a legal maximum on the price at which a good or service can be sold. It is imposed by the government to prevent prices from rising above a certain level.

Not Binding Price Ceiling

When the government imposes a price ceiling of 4€ per cornet, but the market equilibrium price is 3€, the ceiling has no effect on the market price or the quantity sold. The market naturally operates below the imposed maximum.

Binding Price Ceiling

When the government imposes a price ceiling of 2€ per cornet, and the equilibrium price is 3€, the price ceiling becomes a binding constraint on the market. Supply and demand naturally push the market price towards the equilibrium, but when the price hits the ceiling,... Continue reading "Government Intervention: Price Controls & Externalities" »