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

Comparison of Legal Forms

Sole Trader

Basic Features:

• No required minimum capital.
• Unlimited liability.
• Pays income tax.
• The employer has total control of the company.

Advantages:

• It's a perfect business form for the operation of small-sized companies.
• The employer has complete freedom of choice and total control of the company, as they do not need to agree with any partner.
• This form requires the fewest steps and procedures to carry out activities since there is no process to acquire legal personality.
• There is no minimum capital for start-up.
• It can provide tax credits to pay income tax, meaning that a progressive rate applies that increases as profits rise. In contrast, corporations have to pay a fixed tax rate of 25% or 30%. This means that companies

The Funnel Theory: Navigating Resource Scarcity

The Funnel Theory posits that businesses must innovate and adapt to declining resources and ecosystem services, coupled with increasing demand. This creates a challenging environment, a kind of funnel, through which businesses must navigate by being innovative, stakeholder-oriented, and long-term oriented.

Core Competencies for Sustainable Management

Effective sustainable management relies on several key competencies:

• Corporate Social Responsibility (CSR): This relates to enterprises managing stakeholder relationships and adhering to a code of conduct.
• Sustainable Development: This focuses on countries or global organizations addressing environmental concerns and the impacts of globalization.
• Business

Financial Ratios Summary

Fund of Operation:

• AC - PC: The company has working capital, is in financial and asset balance, is not in default, and has no problems dealing with short-term debt.

Ratio of Availability:

• Available / PC: If the ratio is between 0.1 and 0.3, there are idle resources available.

Liquidity Ratio:

• AC / PC: If the ratio is between 1.5 and 1.6, the company has a revolving fund and is not in default.

Ratio of Warranty:

• Total Assets / Total Liabilities: If the ratio is 2, the company is in bankruptcy and cannot guarantee payment of its debts to creditors.

Human Resource Management

Human resources are managed for any organization and business. It is essential to have an area responsible for the administrative functions of staff, staff... Continue reading "Financial Ratios and Human Resource Management Best Practices" »

Marketing

Marketing is a set of activities, the objective of which is to satisfy needs and desires. A need is a sense of lack of something. If you cannot meet the needs, you cannot fulfill the wish. Consumers are those that satisfy the needs and desires, also called applicants. The market today is the place where the applicants or consumers are. All this is done for profit. Marketing is a social and administrative process; it is a process that has administrative functions: planning, managing, and controlling. It produces the product the consumer wants. The target market is the market where the company wants to go. A company has to think of the competitor to give confidence to the customer.

Marketing Objectives

• To maximize the benefits of the company

Factors Affecting Income Balance and Interest Rates

An increase in the money supply shifts the LM curve rightward, decreasing the interest rate and increasing income.

This increase in the money stock creates excess money supply, decreasing the interest rate. As the interest rate falls, investment demand rises, leading to increased revenue and consumption, induced by higher income. Conversely, a decline in the money stock shifts the LM curve leftward, decreasing equilibrium income and increasing the equilibrium interest rate.

Another factor shifting the LM curve is a change in money demand.

Curve Analysis

Fiscal policy variables shift the IS curve, affecting equilibrium income and interest rates. Income growth is driven by increased aggregate demand:... Continue reading "Determinants of Income, Interest Rates, and Economic Policy Effectiveness" »

Company Financing: An Overview

Funding is essential for a company to cover its expenditures and investments. We can distinguish different sources of funding:

Sources of Funding

By Ownership

• Self-financing: Resources belonging to the company's owners.
• External Financing: Funds from third parties.

By Source

• Self-financing: Funds generated by the company's activities.
• External Funding: Inputs from outside sources.

By Duration

• Permanent Resources: Integrate net worth and liabilities.
• Short-Term Resources: Make up current liabilities.

When choosing a source of financing, a company must consider the item being financed and the cost of financing.

Disadvantages of Self-Financing:

• The lack of explicit cost may favor unprofitable investments.
• Conflicts can arise between

General Tendering Procedures

General Tenders represent a formal procedure for selecting suppliers. Any registered supplier may participate, provided they comply with the specific conditions associated with each selection process. In this process, pre-selection acts, the receipt of bids, and the public opening of economic bids are critical steps leading to the final decision.

Conditions for General Tenders

A purchase is made via general tenders if the purchase request meets any of the following conditions:

• For the purchase of goods or contracting of services with an estimated value exceeding €60,000.
• For construction works with an estimated value exceeding €180,000.

The Bids Commission

Commission Purpose and Structure

The Bids Commission is a committee... Continue reading "Optimizing Procurement: Tendering and Supplier Selection" »

Operations of Banks

1. Collection

Receiving deposits and current account contracts.

• a. Overnight Deposits

  The bank receives money, and the owner can withdraw without any restriction.

• b. Current Accounts

  A contract where the bank pays for funds from the account of third parties the account holder has available.

• c. Collection Period

  Similar to deposits but with different terms and conditions for termination.

2. Loans

Financial resources that are taken up by banks to provide loans through mutual use of natural and legal persons.

• a. Simple Credits

  Where the bank, through mutual agreement, gives money to individuals.

• b. Revolving Credits on Current Account

  If the customer's account is insufficient to pay, the bank provides a loan of money.

• c. Issuance of Credit

Theories of the Firm

Business economics studies the existence of firms by examining how agents decide to use their scarce resources.

In a market-regulated pricing system, an agent can buy or sell at a price equilibrium. If the market worked efficiently, the existence of firms might seem unnecessary. However, companies exist because the market doesn't always function perfectly.

There are four major areas in the theories of the firm: transaction cost theory, agency theory, strategic management, and business organizational cooperation.

Theory of the Firm: A Basic Production Unit

The theory of the firm views the company as the basic production unit, aiming to maximize profit. It utilizes productive factors and sources of supply of goods and services.... Continue reading "Understanding Theories of the Firm: A Comprehensive Analysis" »

Factors of Goods and Services

Production Costs

These depend on the provision of factors of production and the technology used, which have a decisive influence on the selling prices of various goods and services.

Application in International Trade

This fosters international trade, as, in practice, it is very difficult for a single country to produce everything necessary to meet the preferences or tastes of its inhabitants.

Customs Territory Defined

A customs territory is a geographical area with free circulation of goods, and it does not necessarily coincide with the political boundaries of a country.

Theory of Comparative Advantage

According to this theory, countries seek to specialize in the production of goods and services they can exchange more... Continue reading "Key Concepts in International Trade & Economics" »