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

What Is a Company?

A company consists of individuals or organizations that strive to earn a profit by providing products that satisfy people's needs.

Different Kinds of Products

Products are the outcomes of a company's efforts. They possess both tangible and intangible characteristics that provide satisfaction and benefits. When purchasing a product, consumers acquire the perceived benefits and satisfaction it offers.

Factors for Earning a Profit

Profitability requires effective management skills in planning, organizing, and controlling business activities. It also involves finding and developing employees, creating desirable products, and implementing marketing strategies to manufacture, price, promote, and distribute those products.

Stakeholders

Stakeholders... Continue reading "Understanding Business Fundamentals" »

Levels of Economic Integration

The progression of economic integration levels is as follows:

• Preferential Trade Area
• Free Trade Area (FTA)
• Customs Union (CU)
• Common Market
• Economic Union
• Political Union

What is Dumping?

Dumping is the practice of selling a product at a lower price in an external market than in the domestic market. Two conditions are typically required:

1. Segmentation of markets.
2. Imperfect competition in, at least, one of the two countries.

Sometimes, dumping is defined as selling below cost.

Rules of Origin (ROO)

Requirement and Purpose

Rules of Origin define whether a good is eligible for duty-free treatment based on whether it has sufficiently originated in the partner country. They prevent trade deflection.

Trade Deflection: Redirection of... Continue reading "Economic Integration Levels and Trade Policy Concepts" »

Fiscal policy can be defined as governments' actions to influence an economy through the use of taxation and spending. This type of policy is used when policymakers believe the economy needs outside help to adjust to a desired point. Typically, a government has a desire to maintain steady prices, employment level, and a growing economy. If any of these areas are out of sorts, some type of fiscal policy may be in order.

Fiscal policy can be used to either stimulate a sluggish economy or to slow down an economy that is growing at a rate that is getting out of control (which can lead to inflation or asset bubbles). Fiscal policy directly affects the aggregate demand of an economy. Recall that aggregate demand is the total number of final goods... Continue reading "Understanding Fiscal Policy: Expansionary and Contractionary Measures" »

Distribution Channels

Exclusive Distribution (Lamborghini)

• Intermediary gains exclusive rights to sell product in specific geographic area.
• Limited number of intermediaries.
• Stronger distributor support.
• Greater control over product.
• Enhanced brand image.
• Higher markups.
• Exclusive dealing arrangements.

Selective Distribution (Apple)

• Manufacturer selects limited number of stores to sell product.
• Selection based on objective criteria.
• Maintains relative control.
• Expects above-average sales effort.

Intensive Distribution (Hacendado Products)

• Producer uses as many specialized outlets as possible to provide:
• Maximum brand exposure.
• Consumer convenience.

Extensive Distribution (Kit Kat)

• Producer uses as many outlets as possible (of any category) to provide:
• Maximum

1) Business and New Technologies

Working from Home

Nowadays, new technologies are transforming the business landscape. This composition will explore some of these impactful technologies.

Firstly, working from home has emerged as a prominent trend. This new technique allows individuals to work for a company remotely, eliminating the need to be physically present in the workplace. Working from home offers both advantages and disadvantages.

Advantages of Working from Home

• Cost Savings: Working from home allows individuals to save on various costs associated with commuting to work.
• Flexibility: Workers can enjoy the flexibility of choosing their own work hours, lighting, and overall work environment, enabling them to work in a framework that maximizes

Cost Accounting

Cost Accounting is a branch of accounting and has been developed due to limitations of financial accounting. Financial accounting is primarily concerned with record keeping directed towards the preparation of Profit and Loss Account and Balance Sheet. It provides information regarding the profit and loss that the business enterprise is making and also its financial position on a particular date. The financial accounting reports help the management to control in a general way the various functions of the business but it fails to give detailed reports on the efficiency of various divisions. The limitations of Financial Accounting which led to the development of cost accounting

Objectives of Cost Accounting

1. To analyse and classify

Business Combinations

1- Horizontal Combination

• Advantages: minimization of costs, maximization of profits, reduction of the possibilities of overproduction.

2- Vertical Combinations

Entrepreneur is a person who recognizes opportunities and takes risks while operating a business.

Free Enterprise freedom of private business to organize and operate for profit in a competitive system without interference by government

Capital is the money or property owned or used for business

Opportunity Cost is the value of what must be given up to get something else

Business Plan Elements :

• Idea/product : Know what the product is and what it does, Is it realistic or practical? Will it fill a gap in the market?
• Market Research : How can you use customer feedback? You can use that to implement changes to be successful.
• Production : What is the production cost? How will you test the quality of the product? How will you make it ?
• Finance : Know the

Business Structures and Liability

Sole Proprietorship

A business owned by only one person.

Partnership

A business owned by two or more persons who share the risks and rewards.

Corporation

A business treated by law as separate from its owners.

Cooperative

An organization or business owned and operated by its members, who pool their resources and share the benefits.

Unlimited Liability

Full legal and financial responsibility for a business.

Limited Liability

Financial responsibility of business owners only for what they invested in the business.

Nonprofit Organization

A business whose main purpose is to provide a service rather than to make a profit.

Supply Chain, Operations, and Ownership

Producer

A business that gathers raw materials in their natural state.... Continue reading "Essential Business Definitions and Legal Compliance" »

Understanding Key Macroeconomic Balances

National Accounts & Economic Identities

• Current Account Balance + Capital Account Balance = Net lending (+) / Net borrowing (–)
• CAB + Capital Account Balance = Financial Account Balance – Errors and omissions
• Gross Domestic Product at market prices (GDPmp) = Final Consumption Expenditure (FCE) + Gross Fixed Capital Formation (GFCF) + Exports (X) – Imports (M)
• Gross National Income (GNI) = GDPmp + Net Primary Income with RoW (NPI)
• Gross National Disposable Income (GNDI) = GNI + Net Secondary Income with RoW* (NSI)
• * net current transfers with RoW
• GNDI = GDPmp + NPI + NSI
• GNDI = FCE + GFCF + X – M + NPI + NSI
• X – M + NPI + NSI = Current Account Balance
• Domestic Demand = FCE + GFCF
• GNDI – Domestic Demand