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

The Entrepreneur

An entrepreneur is a person who takes the initiative and assumes the risk in a company. This individual may be referred to as an autonomous social agent and is a leader in a cooperative or commercial enterprise.

Concept of Business

A business is an economic production unit whose purpose is to create or increase the utility of goods and meet human needs. The end goal of the company is to achieve the objectives it has set, seeking to maximize its benefits.

Company Features

• Common: Accounting, financial, administrative, and HR.
• Specific: Commercial, production, research.
• Other: Technical, security, R&D.

Elements of a Company

• Internal:
  • Materials: Land, buildings and installations, machinery and transport elements, stocks, money, clients,

Service Economy

It is an economic and social transformation that primarily affects developed countries since the last phase of the industrial revolution. It is not only that the employed population in the tertiary sector (services) becomes larger than the secondary sector (industry), but also how the work itself in this sector is increasingly disseminated and outsourced.

Welfare State

A more specific concept, which in practice is considered a category to designate either a set of proposals or a general approach regarding how the state should or could proceed. For example, the Spanish state provides education and healthcare.

Rural Tourism

A tourist activity that is performed in a rural area, usually in small towns or outside the village in larger... Continue reading "Fundamental Economic and Tourism Terminology" »

Labor Market Characteristics

The labor market is influenced by various factors, including how companies and unions affect wages. Work is not a homogeneous product; several factors determine salary and compensation differences:

• Wages for workers in dangerous jobs tend to be higher.
• Differences in talents and skills.
• Differences in human capital: more skilled and prepared individuals are generally better paid.
• Efficiency Wages: A type of wage used by some companies to incentivize and motivate their workers to increase productivity.
• Discrimination: Men often receive higher wages.

Causes of Unemployment

Neoclassical Theory

If the labor market operated freely and wages were flexible to lower and raise, there would be no unemployment, even with a serious... Continue reading "Labor Market Dynamics: Unemployment Causes and Job Creation" »

Economic Crises in Mexico (1976-2008)

Defining Economic Crisis

An economic crisis is characterized by a decline or stagnation in output and real incomes, leading to reduced employment and an uneven distribution of national wealth and income.

The 1976 Economic Crisis

1. Fiscal disorder in the U.S.
2. The Bretton Woods Agreement established the dollar as the reserve currency for all countries.
3. External financing of the fiscal deficit and current account.
4. In 1973, the Bretton Woods arrangement collapsed, and flotation was established between currencies.
5. High petroleum prices and increased contributions.
6. Excessive government spending.
7. Public debt as a percentage of GDP: 12% in 1970, rising to 35% in 1976.
8. Increased foreign loans and bank credit in Mexico.
9. Central

Economic Rationality

Economic rationality assumes that households and businesses use their scarce resources to maximize their own utility or profit, respectively. It is used to model economics to explain and predict the behavior of economic agents.

Households

Function: Consumer target

Objective: Maximize their own welfare by choosing goods that satisfy them according to their preferences and their limited budget.

Businesses

Function: Production

Objective: Maximize profits through effective utilization of available resources to produce goods and services as profitably as possible.

Public Sector

Function: Regulation system

Objective: Maximize the general welfare by using available resources to produce required public goods and services and reducing inequalities.... Continue reading "Economic Rationality: Households, Businesses, and the Public Sector" »

Activity-Based Costing (ABC) Fundamentals

Background of ABC Costing

The background of Activity-Based Costing (ABC) stems from the principles established by management accounting experts Robin Cooper and Robert Kaplan. They asserted that the cost of goods must include the cost of all necessary activities employed, not just manufacturing costs.

This means that traditional product costs (raw material, labor, and manufacturing overhead) are supplemented by costs incurred through efforts made for non-manufacturing activities, such as:

• Sales
• Distribution
• Service
• Post-sales support

Defining Activity-Based Costing

ABC is a methodology that assigns costs to products or services based on the consumption of activities. Key characteristics include:

• Manufacturing

Marketing and Business

The Concept of Marketing

Marketing is the process of creating, communicating, and distributing value to satisfy consumer needs and establish lasting exchange relationships. It focuses on acquiring new customers while retaining existing ones, as they generate the majority of sales revenue. Marketing stimulates demand but does not create the need.

Marketing Guidelines

Marketing strategies vary depending on the market situation. Key approaches include:

• Production Orientation

  Focuses on lowering production costs to offer lower-priced products (e.g., Henry Ford's approach).

• Product Orientation

  Emphasizes producing the highest quality products, applicable when demand exceeds supply (e.g., early mobile phones).

• Sales Orientation

  Prioritizes

Defining Economic Science

Economics is the science that studies how economic agents rationally utilize scarce resources to meet alternative needs to achieve specific objectives.

Rationality, Effectiveness, and Efficiency

Rationally means seeking effectiveness and efficiency:

• Effectiveness: Achieving a specific goal.
• Efficiency: Achieving that goal while using the least amount of resources possible.

Objectives of Economic Agents

Economic agents pursue distinct objectives:

• Families: Maximizing utility (welfare) through consumption.
• Companies: Producing goods and services to maximize profit (benefit).
• Public Administration: Spending or investing to maximize the welfare of its citizens.

Economic Activity, Goods, and Services

Economic activity is the specific... Continue reading "Fundamentals of Economic Science and Market Structures" »

Key Production Function Activities

Procurement

Provides the necessary materials for production, including supplier selection and purchasing management.

Manufacturing

Manages the production process, transforming various production factors into a final product.

Quality Control

Verifies that the manufactured product possesses the characteristics desired by customers.

Current Trends in Production and Operations

Global Outlook

Companies are no longer limited to producing for a single country; they can produce in different countries or organize their production globally.

Just-In-Time (JIT) Production

Businesses no longer produce in large quantities for storage. Instead, they aim to offer products precisely when demanded by the client, necessitating rapid production.... Continue reading "Optimizing Business Production and Operations" »

Understanding Key Financial Components

Active Non-Current Assets

Intangible Assets

• Research and Development
• Administrative concessions, industrial property, and transfer rights
• Computer software

Fixed Assets

• Land and natural resources (not specified)
• Construction (not specified)
• Technical installations
• Machinery
• Cranes
• Furniture
• Equipment for process information
• Other tangible assets

Investment Property

• Land and natural resources (specified)
• Construction (specified)

Long-Term Financial Investments

Current Assets

Stocks

• Commercial
• Raw materials
• Current Products
• Finished Products

Receivables

• Customers
• Debtors
• Public Finance debtors
• Organizations-Social Security debtors

Available

• Banks and credit institutions
• Safety

Financial Returns

Financial (ROI, ROA): BAII / Total Assets:... Continue reading "Understanding Assets, Liabilities, and Financial Ratios" »