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

What is Economic Activity?

Economic activity encompasses all processes used to obtain goods and services that people need. This includes essentials such as food, clothing, housing, or medical attention.

Phases of Economic Activity

Economic activity is typically divided into three main phases:

• Production

  This phase involves the creation of goods and services.

• Consumption

  This is the process where individuals and households buy and use goods and services to satisfy their economic wants and needs.

• Distribution

  This phase refers to the movement of goods and services from their places of production to the consumer.

Evolution of Payment Methods

Throughout history, various methods have been used for payment:

• Barter
• Natural coins (e.g., shells, salt)
• Metal coins
• Paper

Understanding Key Development Indicators

HDI (Human Development Index)

The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and having a decent standard of living. It was created to emphasize that people and their capabilities should be the ultimate criteria for assessing a country's development, not economic growth alone.

MPI (Multidimensional Poverty Index)

The Multidimensional Poverty Index (MPI) is a summary measure of average achievement in key dimensions of human development: health, education, and a decent standard of living. This index replaced HDI in some contexts. It is used instead of Gross National Income (GNI) because GNI... Continue reading "Understanding Key Development Indicators: HDI, MPI, GPI & More" »

Today, organizations are facing a greater need to adapt to new realities. This often results in organizational change. The process of implementing change in an organization is often complex and challenging for most managers. To increase the chances of successful implementation, it is recommended to use some version of a change model. One of the most popular models is John Kotter's 8-step change model, which includes the following specific steps:

1. Establish a sense of urgency
2. Create the guiding coalition
3. Develop a vision and strategy
4. Communicate the change vision
5. Empower broad-based action
6. Generate short-term wins
7. Consolidate gains to produce more change
8. Anchor change in the organization's culture

Establish a Sense of Urgency

First, the organization needs... Continue reading "Kotter's 8-Step Change Practice: A Guide for Successful Implementation" »

Minimum Level or Safety Stock

The minimum level is the minimum quantity of the material which must be maintained in hand at all times. The quantity is fixed so that the production is not held up due to shortage of the materials. In fixing this level, the following factors should be considered:

• Lead time i.e. time lag between indenting and receiving of the material. It is the time required to replenish the supply.
• Rate of consumption of the material during the lead time.
• Nature of the material. Minimum level is not required in case of a special material which is required against customer’s specific order.

Maximum Stock Level

It is the maximum of stock which should be held in stock at any time during the year. The quantity is fixed so as to avoid... Continue reading "Inventory Management Techniques and Time-Keeping Methods" »

Marketing Management

1. Marketing Concept – is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs.

Market orientation to Customer needs.

2. Porter’s 5 forces – theory based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. P5F help to identify where power lies in a business situation.

Competition (Supplier Power, Threat of new entry, Buyer power, Threat of substitute product)

Examples: 1) Supplier power, such as "switching" costs, availability of alternative suppliers, degree of labor solidarity, and the sensitivity of selling price to supply costs.

2) Threat of new entry, such as barriers to entry (i.e. patents,... Continue reading "Marketing Management and Consumer Behavior" »

CHAPTER 14: Material Requirements Planning (MRP)

Independent vs. Dependent Demand

Independent Demand

Finished goods, such as computers, have independent demand, meaning their demand is uncertain and influenced by external factors.

Dependent Demand

Components of finished products, like computer parts, have dependent demand, meaning their demand is certain and directly related to the demand for the finished product.

What is Material Requirements Planning (MRP)?

Material Requirements Planning (MRP) is a dependent demand technique that uses a bill-of-material, inventory data, expected receipts, and a master production schedule to determine the materials and components needed to produce finished goods.

Benefits of MRP

• Better response to customer orders
• Faster

1- Intermediaries: Buy products from manufacturers and resell them to consumers.

Import Quota Effects

3) An import quota will increase producer surplus, decrease consumer surplus, have no effect on government revenue, and have an ambiguous effect on overall domestic national welfare.

C) increase; decrease; have no effect on; have an ambiguous effect on

Voluntary Export Restraint Effects

4) A voluntary export restraint will increase producer surplus, decrease consumer surplus, have no effect on government revenue, and decrease overall domestic national welfare.

D) increase; decrease; have no effect on; decrease

Export Tariff Effects with Imperfect Competition

1) If an import-competing firm is imperfectly competitive, then under free trade an export tariff will increase domestic market price, have no effect on producer surplus,

Three Types of Foreign Direct Investment (FDI)

Foreign Direct Investment can be categorized into three main types:

• Market Seeking: FDI is driven by the desire to be closer to customers. Proximity reduces transportation costs and potentially tariffs. Firms weigh the benefits of FDI against exporting, where production is concentrated in one location.
• Efficiency Seeking: Upstream and downstream products are manufactured in different locations, leveraging factor intensity and factor prices. This strategy aims to optimize production costs.
• Resource Seeking: FDI provides access to scarce resources. Output from resource-seeking FDI is seldom sold in the host country market.

Consequences of FDI for Host Countries

FDI can have several effects on host countries,... Continue reading "Foreign Direct Investment, Trade Theories, Barriers" »

Assignment 5