Notes, abstracts, papers, exams and problems of Economy

Monopoly Production and Marginal Revenue

Understanding the Demand Curve and Marginal Revenue

Median income is the price at which a certain quantity (x units) is sold on the demand curve. To maximize profit, a monopolist needs to understand their marginal revenue. Marginal revenue is the change in total revenue when the production level varies. Table 1 (not provided) shows the average total income, demand curve, and marginal revenue curve. Observe that income is zero when the price is $6; at that price, nothing is sold. When one unit is sold at $5, the total revenue is $5. Increasing sales from one to two units increases income from $5 to $8, so the marginal revenue is $3. If sales increase from two to three units, marginal revenue falls to $... Continue reading "Monopoly Production and Marginal Revenue Analysis" »

Euribor and the Role of Central Banks

Euribor is the interest rate that the Bank of Spain has to pay to the European Central Bank for central bank money. A central bank is the institution charged with overseeing the financial system and regulating the amount of money in an economy.

Functions of a Central Bank

Its functions are:

1. To safeguard and manage foreign exchange and precious metals.
2. To supervise the functioning of credit institutions.
3. To control the proper functioning of the financial system.
4. To put currency into circulation.
5. To prepare and publish reports.
6. To act as the state's bank.
7. To advise the government.

The Bank of Spain

The Bank of Spain is the Spanish monetary authority that regulates the country's financial activities. It is a member of... Continue reading "Euribor and Central Bank Functions: Understanding Monetary Policy" »

Technology: Knowledge, Need, Imagination, and Resources

Technology is the combination of knowledge, need, imagination, and resources. It is not to be ignored.

Technological Evolution

Technological evolution is generated by necessity. Technological involution refers to technology without demand, which is not required.

Factors Influencing Technology

Factors in the technological and social environment push for the generation of a need. Factors in the social environment within society generate necessities. Examples include education, war, and food.

Relationship Between Technology and Education

The relationship between technology and education relates to the impact on Information Technology (IT). Technology advances faster than our ability to adapt.

Factors

Key Business Concepts

Economic Factors

Differentiating factor: Price can be a decisive factor for a product. For example, a cafeteria can be oriented based on price, class, or other demographics.

Practical Factors

Practical factors, such as comfort and confidence, can influence purchase decisions. An example of this is home delivery.

Aesthetic Factors

Aesthetic factors, like an attractive package, color, and size, can appeal to customers.

Technical Factors

Consider what unique features your product offers compared to others.

Psychological Factors

Psychological factors relate to social status and fashion.

Product

A product is anything offered for consumption in the market.

Product Levels

• Basic: The core need the consumer expects to satisfy.
• Formal: Something

Types of Unemployment

Structural: This occurs when companies do not provide sufficient work for the population. Cyclical: This is produced when there is an economic recession or crisis. Seasonal: This is when the demand for workers is different in distinct periods of the year. Frictional: This occurs when a person decides to change their job and, while in this situation, they are unemployed.

Personal Income

This represents the gross salary of a person. A part of this money is appropriated by the state through taxes. The money that remains is called personal income or disposable income. Studies show that this income is divided between consumption and savings. The percentages are known in economics as the propensity to consume and save. Do not... Continue reading "Understanding Unemployment and Economic Indicators" »

Spain's 1959 Stabilization Plan

The government aimed to adapt the Spanish economy, stabilize prices, and revive industry. The International Monetary Fund (IMF) and U.S. funders supported the new government's economic policy.

Through the Decree-Law of July 21 and July 27, 1959, on foreign investments, and the banking reform of 1962, the following steps were implemented:

• Cutting public expenditure.
• Reforming the Bank of Spain, placing it under the control of the Ministry of Finance.
• Increasing taxes on gasoline and tobacco.
• Devaluation of the Peseta (Pst.).
• Liberalizing trade.
• Limiting credit to private banks.
• Implementing new regulations for foreign investment.
• Creating official credit institutions: the Official Credit Bank, Mortgage Bank, Construction

Royal Decree-Law of 6 March 2009: Urgent Measures for Employment Promotion and Protection of Unemployed Persons (Plan E)

Government measures for the protection of unemployed persons were subdivided into the Spanish Plan for Stimulating the Economy and Employment. Plan E has four strands, designed in 2009, allocating significant amounts of disposable income to support families and companies.

• The plan introduces measures to support job creation, including the Local Investment Fund and the Special Fund for the Revitalization of the Economy and Employment.
• The plan reflects proceedings taken in coordination with the European Union to provide liquidity to the financial system.
• It includes an ambitious agenda of reforms to modernize our economy, improve

ABC Model

The ABC model sorts by the relative importance of various stocks of a company when it has a large inventory with a wide variety of products and cannot devote the same time or the same resources to each. It is based on classifying stocks into three categories:

• Existences A: Items are most important for the management of supply, 20% of store items, overall, 60-80% of total stock.
• Existences B: Stock less relevant to the company, but must maintain a control system (less strict).
• Existences C: Stocks with very little relevance, control them specifically enough to more simplified methods.

JIT System

The Just-In-Time (JIT) system is an integrated management of production and supply developed in Japan in the 1980s. Currently, it is used in major... Continue reading "ABC and JIT Inventory Management: Optimizing Stock and Production" »

The Foreign Exchange Market and Exchange Rate

Currency Devaluation

To regain economic competitiveness, countries often devalue their local currency. This action improves the balance of payments because national products and services become cheaper, attracting foreign customers. Conversely, foreign products and services become more expensive, encouraging domestic consumption.

Exchange Rate Determination

Currently, exchange rates for most currencies are not officially fixed but fluctuate freely in markets. However, many developing countries maintain government controls on their currency's price. Central banks often adapt the exchange rate based on supply and demand. Developed countries, including China, do not officially set exchange rates but... Continue reading "Foreign Exchange Market and Exchange Rate Dynamics" »

Commercial and Tax Law

Commercial Law

Commercial Law is the body of law that regulates economic activity related to businesses. This area of law covers issues such as the company's legal form, accounting, and advertising. The Commercial Code is the main legislative framework for commercial transactions in Spain. The Commercial Register is a state agency under the Ministry of Justice. The Register is divided into Territorial Registries, one in each provincial capital, and a Central Registry.

Tax Law

Tax law arises from the state's need to raise revenue to cover public expenditure.

Taxes and Their Classification

Taxes are an important source of revenue for the state budget. They have a binding character for taxpayers. Taxes can be classified as:

• Fees: