Notes, abstracts, papers, exams and problems of Economy

Key Business & Economic Terms

COMPANY: An economic unit that is used to produce goods and services.

ECONOMIC ACTIVITY: This is part of human activity that has to do with allocating scarce assets to fulfill unlimited wants.

CORPORATE SOCIAL RESPONSIBILITY: It is a responsibility firms voluntarily assume that goes beyond what the law requires.

MULTINATIONAL: A large company headquartered in one country with branches in other countries.

GLOBALIZATION: The extension of economic, cultural, and social processes across the world.

DECOLONIZATION: Consists of a transfer of economic activity from one company to another country for advantages that benefit the company.

An economic good: It is scarce, limited, and requires payment.

INDUSTRIAL PROPERTY: A property... Continue reading "Key Business & Economic Terms: A Concise Reference" »

The Public Sector: An Overview

The public sector comprises institutions whose activities are guided by political decisions. It is divided into public administration and public enterprises.

Economic Functions of the Public Sector

The public sector serves several key economic functions:

• Acting as an economic agent.
• Regulating economic relations.
• Providing public goods.
• Implementing economic policy.

Regulation

Regulation involves establishing standards and procedures that economic agents must follow to address economic problems.

Reasons for Regulation

• To compensate for market failures.
• To provide collateral security.
• To ensure the common good.
• To guarantee efficiency.
• To ensure fair competition.

Deregulation

Deregulation involves eliminating laws and regulations... Continue reading "Understanding the Public Sector: Economic Functions and Policy" »

Components of Economic Policy

Tax Policy

Tax policy is an essential tool to facilitate growth, investment, and social balance. It is a key concern for the Government.

Exchange Policy

Exchange policy is the joint action implemented by the monetary authority to establish or manage the exchange rate parity.

Interest Rate

The interest rate is the percentage applied to a sum of money (capital) and is equivalent to the amount to be paid or charged for loaning or borrowing money.

Money Supply

The money supply is the principal variable used. It is the amount of money circulating in the economy to move the commercial and financial transactions of society. It is the package of cash circulating in the economy and serves to cherish and value, deferring future... Continue reading "Understanding Economic Policy: Key Components and Mechanisms" »

Matching Terms with Definitions

Match the following terms with their definitions:

1. Value of Land (Income Economics): The value of land increases over time depending on location.
2. Oligopoly: Producers collaborate to maximize profits.
3. Wage Theory: Individuals are compensated based on the value of their marginal product.
4. Price Theory: Characterized by product differentiation and sales promotion.
5. Monopolistic Competition: Considers both supply and demand factors.
6. Monopoly: Market power is often measured using the concentration ratio.
7. Dumping: Selling goods produced domestically at a lower price in foreign markets.
8. Scope Economics: Combining two or more lines of production within a business.
9. Perfect Competition: Prices are determined by the interaction of supply

The Prisoner's Dilemma

The Prisoner's Dilemma is a concept in game theory based on two assumptions:

1. Each player has an incentive to choose an alternative that benefits them but hurts the other player.
2. When both players act in that way, they end up in a worse situation than if they had chosen different alternatives.

Dominant Strategy

A dominant strategy is the best decision an individual can make, regardless of the decision taken by the other player. Not all games have a dominant strategy; it depends on the game's payoff structure. In the Prisoner's Dilemma, a dominant strategy exists (to confess). As long as the two prisoners cannot agree *not* to confess (something that cannot be maintained while incommunicado), they will both act against each... Continue reading "Prisoner's Dilemma, Nash Equilibrium & Oligopoly" »

Purchase Price & Cost of Production

Purchase price: Is the total amount of the purchase, including all expenses related to the acquisition operation (transport, insurance, packaging, etc.).

Cost of production: Is the sum of all costs required to manufacture a product, such as labor, raw materials, or energy consumption.

This company knows, at every moment, the value of what has come to stores. This control is a tool that performs using an existence control tab, which is a document that registers, for each type of existence and valuation, a detailed timeline of entries and exits of the store.

Criteria for Valuation of Stocks

The criteria for the valuation of stocks are different ways how a company can economically evaluate the inventory and control... Continue reading "Purchase Price & Cost of Production: Inventory Valuation" »

Glossary of Economic Terms

A

Autarchy

A system of a state that intends to be economically self-sufficient and could be met from its own resources, eliminating imports.

B

Balance of Payments

An account that records transactions and international economic transactions made by a country for a year.

C

Constitution

The fundamental law of a state's organization. The first written constitution was in the U.S. and is still in force. In Spain, the first Constitutional text was drafted by the Cortes of Cadiz in 1812.

Corporatism

Political and economic doctrines advocating the integration of workers and employers in the same occupation into a single organization.

D

Deficit

A situation that occurs in an account, budget, etc., when costs outweigh gains.

Deflation

When... Continue reading "Glossary of Economic Terms: Autarchy, Balance of Payments, and More" »

State Intervention in the Economy

State intervention in the economy is justified in two ways:

1. The market mechanism generates a combination unwanted by society.
2. The existence of so-called market failures.

Market failure occurs when the intervention generates the same market imperfections, preventing optimal results. Main market failures:

• Existence of public goods: These goods are characterized because the consumption of one individual does not cause exclusion from the consumption of other individuals.
• Existence of imperfectly competitive markets (monopolies, oligopolies, and monopolistic competition): The fundamental characteristic of this market is the ability of companies to influence the market price. The state tries to make such markets disappear

Communication Channels

Effective communication channels: The communication must be effective and not distorted. According to Koontz, an agent is not needed as much as information. The established channels and command levels are a consequence of the leadership styles:

• Descending communication: Management transmits the information the company believes is desirable for the institutions and to carry out the company's orders and policies. It occurs through the hierarchical line of direction, mediante meetings with middle management. It is self-communication of authoritarian styles.
• Upward communication: Reflecting the situation of subordinate levels while collecting aspirations and concerns of their own. It uses various means of participation: meetings,

Decoding Marketing Promotions