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

Aggregate Demand Shifters

The following factors cause shifts in aggregate demand:

• C (Consumption): Consumer wealth, consumer expectations, household indebtedness, and taxes.
• I (Investment): Interest rates, expected returns on investment, business taxes, technology, and the degree of excess capacity.
• G (Government Spending)
• Xn (Net Exports): National income abroad and exchange rates.

Aggregate Supply Shifters

The following factors cause shifts in aggregate supply:

• Input Prices: Domestic resource availability (land, labor, capital, entrepreneurial ability), prices of imported resources, and market power.
• Productivity
• Legal/Institutional Environment: Business taxes, subsidies, and government regulation.

AS Curve Ranges

• Horizontal Range: Includes real levels

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" »

Chapter Ten: Pricing

Understanding and Capturing Customer Value

What Is a Price?

Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service.

Price is the only element in the marketing mix that produces revenue; all other elements represent costs.

Major Pricing Strategies

Customer Value-Based Pricing

Value-based pricing uses the buyers’ perceptions of value, not the seller's cost, as the key to pricing.

• Value-based pricing is customer-driven.
• Cost-based pricing is product-driven.
• Price is considered before the marketing program is set.

Cost-Based Pricing Process

• Design a good product.
• Determine product costs.
• Set price based on

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" »

Classical Management Theory

Frederick Taylor's Scientific Management

Key Principles of Taylorism:

• Scientific Study of Work: Tasks should be scientifically studied to identify the most efficient methods for performing them. This involves breaking down complex tasks into smaller, simpler steps and analyzing each step.
• Division of Labor: Dividing work between management and workers. Managers are responsible for the planning and scientific analysis of work processes, while workers are tasked with executing the standardized methods.
• Standardization of Tools and Techniques: Taylor emphasized the use of standardized tools and techniques to minimize variability and optimize efficiency.
• Time and Motion Studies: Taylor conducted time and motion studies to

Understanding Poverty in America

Defining Poverty and Its Scope

Political conflict over poverty in America begins with disagreement over its nature and extent, and then it proceeds to disputes over its causes and remedies. While many anti-poverty programs are largely regarded as federal programs, many allow states to set their own eligibility criteria and benefit levels, and are a blend of federal and state government funds. The official poverty rate in the U.S.A. has ranged between 11% and 15% in recent years. This official definition of poverty includes all those Americans whose annual cash income falls below that which is required to maintain a decent standard of living. The official poverty rate varies considerably among the states; poverty... Continue reading "Poverty, Public Health, and Healthcare in the United States" »

Key Business and Economic Terms

Globalization: A process of interaction and integration among people, companies, and governments of different nations.

Infrastructure: Basic facilities and services of a country, for example, roads, water, and power.

Issues: Important subjects that people discuss.

Profitability: The ability of a business to make money.

Welfare benefits: Money paid by the government to people in need, for example, the unemployed.

Flight of capital: A movement of large sums of money out of a country.

Rule the roost: To be the person who makes all the decisions in a group.

Adjective Order in English

When using multiple adjectives, follow this sequence: opinion, size, age, shape, color, origin, material, purpose/qualifier/be about.

Brand Management

Have you ever come across a food product at the supermarket with a label saying Fair Trade? You may have wondered what exactly that means. Fair trade is an arrangement designed to help producers in growing countries achieve sustainable and equitable trade relationships.

Fair trade has two main objectives. On the one hand, the development of peoples. On the other hand, the fight against poverty.

The objectives are based on several pillars: Firstly, producers must have a minimum wage. Secondly, workers should not be children. Finally, the products shall be environmentally friendly.

Consumers pay more attention to the origin of the products they consume. They take into account, for example, how it has been obtained and they are willing to pay more... Continue reading "The Impact of Fair Trade and Ethics on Modern Society" »

Components of International Economic Accounts

Factor Income and Receipts

The Factor Income consists largely of payments and receipts of interest, dividends, and other income generated on foreign investments that were previously made.

Unilateral Transfers Defined

Unilateral Transfers, the final category of the Current Account, are one-way payments that do not require a counter-compensating monetary action. Examples include:

• Foreign aid and reparations
• Official and private grants
• Donations and gifts

The Capital Account Structure

The Capital Account includes all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. It measures the difference between a country’s sales of assets (e.g., US, Colombia) to foreigners... Continue reading "Global Economic Flows: Capital Accounts and Trade Drivers" »

Sensitivity Analysis

2 Members of the Restrictions:

Sensitivity analysis is important because it allows us to determine the opportunity cost of resources.

Obtain Efficient Solutions

By optimizing one objective and considering the other as a parametric constraint, we can obtain an efficient solution for each value between its ideal and anti-ideal points of the objectives included as parametric constraints in the model.

Difference in Pairwise Comparisons in AHP and PROMETHEE

There are two types of pairwise comparisons in AHP: between criteria in the same level with respect to a criterion in the next higher level and between alternatives with respect to a criterion in the next upper level of the hierarchy. PROMETHEE is only based on pairwise comparisons... Continue reading "Multi-Criteria Decision Analysis: Key Concepts and Techniques" »