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

Fundamentals of Production and Economic Efficiency

Core Economic Definitions

The Firm (Company)

A firm is dedicated to producing goods and services. The main reasons for establishing companies include: production control, the provision of funds, and reduced costs. Extraordinary profit attracts businesses to the market, while normal profit does not attract new businesses.

The Plant

A plant is the physical and organizational structure designed for the production of goods or services (e.g., a warehouse or a workshop).

Company: Comprehensive Organization

A complete organization that includes the various aspects of productive activity: planning, administration, production, and sale.

Industry Definition

An industry is the set of firms that produce the same... Continue reading "Production Fundamentals: Efficiency, Productivity, and Market Supply" »

Factors of World Economic Growth: 1945-2007

The second half of the twentieth century (1950-2000) witnessed unprecedented economic and population growth, improving living standards globally. World population more than doubled, rising from 2.5 billion in 1950 to 6 billion in 2000. Production increased over sevenfold, leading to a near tripling of per capita income, despite the population surge. This was achieved with reduced working hours due to significant productivity improvements. Individuals enjoyed more goods, leisure time, better health, and education. However, inequality, poverty, and hunger persisted.

The Golden Age (1950-1973)

This period, also known as the War Boom or Trente Glorieuses, was characterized by stable, regular, and intensive... Continue reading "Global Economic Growth: 1945-2008" »

The Formation of the Corporation

France

French corporations were smaller compared to those in the U.S., England, and Germany. They were often family-dominated and had a close relationship between management and ownership. Examples include Renault cars and Michelin rubber. These corporations featured simple management structures, strong organizational skills in production, but weaker distribution capabilities.

Factors Limiting Concentration:

• Small market size
• Existence of a dense distribution network
• Industry expertise focused on quality goods

Forms of Cooperation:

• Restrictive sales promotion through specific organizations
• Innovation through holding groups of companies that controlled legal and stock exchange matters
• Mergers, which emerged in the early

Understanding Business Structures in Spain

Sole Proprietorship (Autónomo)

• Single Member: Operated by one individual.
• No Minimum Capital: Does not require a specific initial capital contribution.
• Income Tax: Subject to personal income tax.
• Liability: Unlimited personal liability.
• Social Security: Generally registered under the self-employed (Autónomo) social security scheme.

Community of Goods (Comunidad de Bienes - CB)

• Minimum 2 Partners: Formed by at least two individuals.
• No Minimum Capital: Does not require a specific initial capital contribution.
• Income Tax: Partners are subject to personal income tax, proportional to their share.
• Liability: Partners have unlimited personal liability.

Civil Society (Sociedad Civil - SC)

• Minimum 2 Members: Requires

Factoring entities are financial operations, with or without the right of recourse and its maturity. Commercial credits are generated against their clients (invoices, receipts, bills of exchange, etc.). The factoring entity is in charge of putting these credits into circulation, collecting them, accounting for them preferentially, and establishing the form and period of effect with client meetings, assuming the risk of the holder's insolvency.

Contract Elements

Personal Elements

1. Factoring entity: Analyzes the solvency of clients and, once accepted for the assignment, performs a function of 1% of the determined credit for each client. It assumes the risk of insolvency of the assigned credit and manages its collection in exchange for a commission

In the short term, some companies can convert fixed or variable costs to fixed costs. Generally, fixed costs, such as rent for premises, are independent of the level of production. Variable costs are proportional to the volume produced.

Types of Costs

• Direct Costs: These can be directly related to the production of a product or a specific department.
• Indirect Costs: These relate to multiple departments or products, making direct allocation difficult.

Productivity

Productivity is the relationship between the quantity of output produced and the quantity of resources used to achieve that production.

Gantt Chart

A Gantt chart is a visual tool where the horizontal axis represents the time needed to complete a task, and the vertical axis lists the activities... Continue reading "Business Operations: Costs, Productivity, and Marketing" »

Investment Project Analysis

Initial Disbursement

The initial disbursement is the payment amount required to purchase the active elements needed for a project.

Annual Cash Flow

The annual cash flow of an investment project is the difference between the cash receipts and payments a company makes within a specific period.

Residual Value of an Asset

This is the value of an investment asset at the end of its useful life. This residual value is included as a cash receipt in the final period's cash flow.

Investment Valuation Methods

Statistical Methods

These methods, such as the payback period, assume that the value of money is constant over time. They are typically used only for a preliminary assessment of an investment.

Dynamic Methods

Dynamic methods take... Continue reading "Financial Principles for Business Investment and Funding" »

Understanding Globalization (Definition and Scope)

Globalization is defined as economic growth through trade—the willingness of countries to internationalize their economies, driven by technological improvement.

Key Aspects of Globalization

It manifests itself in several key aspects:

• Commercial and Technological: Related to trade and productive regulatory frameworks.
• Cultural: The transfer of ideas and norms across borders.
• Financial: The rise of capital transfer, allowing investment not only in one place but across many regions.

Economic Manifestations of Globalization

Trade Liberalization and WTO

This is achieved through:

• The World Trade Organization (WTO).
• Trade agreements between countries.

Changes in Global Production

Globalization has led to significant... Continue reading "The Dynamics of Globalization: Economic Blocs and Global Challenges" »

Key Business Approaches

3 Approaches:

• Work and organizations (planning, organizing, controlling)
• People (communication, motivation, leadership, work group formation)
• Production and operations

Essential Entrepreneur Skills

5 Critical Entrepreneur Skills:

• Leadership
• Communication
• Decision-making
• Teamwork
• Strategic Vision

Common Entrepreneurial Mistakes

5 Mistakes:

• Unclear goals
• Trying to prove you're smart
• Greed
• Hiring people they like instead of need

The 3 C's of Business

3 C's:

• Company
• Customers
• Competition

Start-Up Costs

Start-Up Costs:

1. Expenses (legal structure, workspace, remodeling, stationery, logos, web page)
2. Purchase assets (inventory, office supplies)
3. Ongoing monthly expenses (rent, utilities, payroll, insurance)
4. Monthly sales projections

Business Plan Components

Executive

Understanding Demand and Supply

A shift in the demand curve signifies a change in the quantity demanded at any given price. This is visually represented by a shift of the demand curve to a new position, resulting in a new demand curve.

Movements Along the Demand Curve

A movement along the demand curve represents a change in the quantity demanded of a good as a result of a change in its price.

Shifts in the Demand Curve

• A rightward shift reflects an increase in the quantity demanded at any price level.
• A leftward shift reflects a decrease in the quantity demanded at any price level.

Supply Curve Dynamics

A shift in the supply curve represents a variation in the quantity supplied at any given price. This is reflected in a shift of the supply curve to... Continue reading "Demand and Supply: Shifts, Movements, and Market Equilibrium" »