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

Production and Economic Structures

Economic Phenomena: A set of phenomena related to production. This encompasses the sum of the output of all production units, creating value added throughout the economy. It's crucial for understanding the overall economic structure and short-term cycles.

Business Management: One type of business management focuses on formulating and implementing strategies. This involves making contingent decisions and considering various factors, such as access to financial resources, fixed capital, and renewal investment. Financial returns and recovery time are key considerations.

Productivity and Efficiency: Output per unit of employee input is a vital metric. Intensive operations management is essential for achieving... Continue reading "Business Management and Strategic Decision-Making" »

Core Marketing Principles Explained

What Is Marketing?

Marketing is a dynamic discipline encompassing technical and political, objective or subjective strategies. Its success depends on the activity of entering the market. Its use became widespread, evolving into an essential term for business. While synonymous with the Spanish terms "mercadotecnia" and "mercadeo," "marketing" was adopted among Spanish speakers. It affects not only business operations but also the entire company structure, which has adapted to meet the challenges of this strategy. Marketing is a process by which companies generate profits by offering goods and services in appropriate markets at suitable and profitable prices, using appropriate promotion and precise advertising... Continue reading "Core Marketing Principles: Definition, Evolution & Research" »

Strategic Business Location and Dimension

Choosing a suitable place for company implementation requires assessing a number of external variables:

1. Market Demand: Analyze if there is interest in the product in the desired area and assess the competitive landscape.
2. Raw Material Procurement: Evaluate the quality, cost, and ease of obtaining raw materials.
3. Labor Market: Consider potential employees, their skills, and labor costs.
4. Communications and Transportation: Assess accessibility for transport and communication with other businesses.
5. Utilities and Supplies: Information on the availability and cost of essential supplies for company operations.
6. Construction and Land Costs: Note that prices vary significantly from place to place.
7. Legislation and Regulations:

Business Integration in the Economic System

Companies are fundamental production units that create value, driving the flows of energy, materials, and money within the economic system.

They detect consumer needs and meet them through the development of goods or services. This interaction generates cash flow: a cost for consumers (purchase price) and sales revenue for the company.

All these activities occur within a fundamental element of the economic system: the market for goods and services.

To produce goods and services, companies utilize several fundamental operational factors, generally including:

• Materials: Provide the basis for production processes.
• Equipment: Used for manufacturing and/or assembly.
• Energy: Powers machinery and operations.
• Labor:

Economic Cycles

Fluctuations in economic activity, characterized by the expansion or contraction of output and employment in most sectors of the economy.

• Expansion: Increases GDP and creates more jobs.
• Recession: Economic resources, workers, and factories sit idle.

Externalities

Situations arising when the activity of a company or a consumer creates external effects that impact third parties. These may be positive for society (social benefits) or negative (social costs).

• Consumption Externalities

  • Positive: Examples include healthcare and education, where the state provides grants to encourage consumption.
  • Negative: Examples include tobacco and alcohol, where the state imposes sanctions and taxation to reduce consumption.

• Production Externalities

  • Positive:

Goods and Services

Who Produces Goods and Services?

Individuals with specific skills tend to be more productive. Specialization is key to efficient production and acquisition of goods and services.

Why Specialization?

The division of labor and exchange promotes productivity.

Factors of Production

• Earth
• Labor
• Capital

These factors combine to generate natural resources (raw materials), which are then transformed into finished products. The ultimate goal of production is profit.

Capital

Capital encompasses machinery, manufactured goods, large-scale plants, and inventories of finished and unfinished materials (excluding human resources).

Natural Capital

Natural resources are considered natural capital when they become a source of profit.

Human Capital

Human capital... Continue reading "Production, Economic Factors, and Agents" »

Tourism: Advantages and Disadvantages

Tourism involves tourists traveling outside their usual environment to experience other cultures for leisure, business, or other purposes.

Advantages of Tourism

• Family Integration: Tourism fosters dialogue and unity within families.
• Natural Resource Utilization: Tourism showcases natural resources, creating new attractions.
• Tourist Security: Enhanced security measures increase tourist confidence.
• Conservation: Preservation of historical and tourist sites protects cultural heritage.
• Job Creation: Tourism projects generate employment opportunities.

Disadvantages of Tourism

• Cultural Loss: Communities may experience cultural erosion due to changing environments.
• Environmental Pollution: Poor management can lead to pollution,

What is Economic Activity?

Economic activity is any process through which we obtain products and services that meet human needs. It encompasses three stages:

• Production
• Distribution
• Consumption

Economic Sectors

The economy is divided into three main sectors:

• Primary Sector: This sector involves obtaining raw materials from nature (e.g., farming, mining, fishing).
• Secondary Sector: This sector transforms raw materials into finished products (e.g., manufacturing, construction).
• Tertiary Sector: This sector provides services to society (e.g., healthcare, education, finance).

Gross Domestic Product (GDP) and GDP Per Capita

GDP is the total value of goods and services produced in a territory within a year.

GDP per capita is calculated by dividing the GDP of... Continue reading "Understanding Economic Activity and Systems" »

Factors Influencing Price Determination

Base or list price: Refers to the unit price of the product at its point of production or resale. It does not reflect discounts, freight charges, or other adjustments, including allocation for a price leader.

Setting a price for an established product is generally less difficult than pricing a new product.

Estimating Demand

Key steps include:

1. Determine if there is a market-expected price.
2. Estimate potential sales volume at various price points.

Note:

• This is usually expressed as a price range rather than a specific amount.
• Intermediaries should be considered; it is easier to promote products if they align with their pricing expectations.
• Setting a price much lower than market expectations can lead to lost sales.

Gross Domestic Product (GDP) Components

GDP can be measured using different approaches:

Expenditure Approach

This approach sums up all spending on final goods and services in an economy. Key components include:

• Consumption: Household spending on goods and services.
• Investments: Business spending on capital goods, inventories, and structures.
• Government Spending: Government expenditures on goods and services (domestic demand).
• Net Exports: Exports minus Imports (external demand).

Income Approach

This approach sums up all income earned from the production of goods and services, often referred to as the income approach to production or added value.

GDP and Economic Well-being: Limitations

While GDP is a widely used economic indicator, it is not a perfect... Continue reading "Macroeconomic Essentials: GDP, Welfare, and Capital Markets" »