Key Concepts in Economics: Foundations and Principles
Economics: The Five Foundations
The five foundations of economics are: Incentives, Trade-offs, Opportunity cost, Marginal thinking.
Trade Creates Value
The principle that trade creates value.
MB = MC Rule
Marginal decision rule: You should engage in any activity so long as the MB > MC. The optimal level of activity is where MB = MC. When MC > MB, you should not undertake the activity.
Production Possibility Frontier (PPF)
In macroeconomics, the production possibility frontier (PPF) represents the
International Trade and Business: Benefits and Barriers
Chapter 3: International Trade and Business
Why Do Firms Engage in International Trade?
Firms engage in international trade to:
- Increase sales and find new markets
- Increase diversification of products
- Utilize excess capacity
- Increase revenue and profit
- Become a stronger competitor in the domestic market
Essentially, firms engage in international trade for the same reasons they engage in domestic trade: to expand their profits and business.
Principal Restrictions on a Nation’s Imports
The principal restrictions
Read MoreDistribution Channels and Transportation Methods in Business
Distribution Channels in Business
Businesses need to know how to get their products to the consumer. They may use a variety of distribution channels:
Channel 1: Direct Sales
The manufacturer sells directly to the customer. For example, agricultural goods are sold straight from the farm, or businesses buy raw materials from another producer.
Channel 2: Retailers
Involves selling to retailers. This is common when the retailer is large or the product is expensive.
Channel 3: Wholesalers
Involves the product
Read MoreEconomic Reforms and Industrialization in Spain: 19th-20th Centuries
Topic 1: 19th Century Economic Reforms
Agrarian Reform:
- Increase in cultivated land through expropriation.
- New structure of landownership, including large and small landowners, and laborers.
- Privatization and increasing market influence for more effective land use.
- Abolition of feudal property.
Fiscal Reform:
Introduction of liberal ideas to find new income sources and reduce debt.
- Suppression of tithes.
- Implementation of direct and indirect taxes.
- Main problem: tax evasion.
- State income doubled, benefiting
Economic Growth and Development: Key Concepts and Challenges
Definitions
- Economic Growth: A quantitative phenomenon, referring to the actual increase in the product or income of a certain economy. It is calculated by comparing the production obtained in two different periods.
- Economic Development: A qualitative phenomenon, considered to be the structural transformation that improves the modes of production (productivity) and the standards of living of a certain economy. It includes economic and social changes and progress for the people of the country. There
Globalization: Characteristics, Markets, and Impact
Characteristics of Globalization
Globalization is the ability to use technology to exchange and communicate goods and services between two or more nations. Example: Making a product in China and selling that product all over the world.
Globalization of Markets
The globalization of markets means that nations are not constrained to their own borders; they are now all connected. Example: Buying products online that are produced all over the world.
Globalization of Production
This means that companies can
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