Tertiary Economic Activities: Services, Trade, Transport
The Tertiary Sector
The tertiary sector comprises activities not dedicated to producing goods, but rather providing services.
Classification of Services
By Management
- Public Services: Managed by the state, municipalities, autonomous communities, etc. Examples include education and health services.
- Private Services: Offered by private companies.
By Function
- Social Services: Satisfy specific societal needs.
- Administrative Services: Handle various governmental or organizational functions.
- Financial Services:
Factor Markets, Labor Unions, and International Trade
Factor Markets
Factor Price Searcher
A firm that faces an upward-sloping supply curve for resources or factors is a factor price searcher.
Marginal Revenue Product (MRP)
MRP is calculated as Marginal Revenue (MR) multiplied by Marginal Physical Product (MPP). MRP = MR x MPP
Marginal Factor Cost (MFC)
MFC is the additional cost generated by employing an additional factor unit.
Factor Demand
A firm’s factor demand curve is its marginal revenue product (MRP) curve. The MRP curve slopes downward for a product
Read MoreUnderstanding the 2008 Financial Crisis: A Detailed Analysis
The 2008 Financial Crisis: A Detailed Analysis
2001-2006: Phase of Liquidity Degradation in Subprime Lending. The credit crisis begins to expand due to central bank stimuli aimed at paying back banks and securitizing their loans. Investment banks shift away from short-term debts that are renewed daily.
Therefore, interest rates fall dramatically, reducing the WACC (Weighted Average Cost of Capital), and projects with very low ROA (Return on Assets) become profitable. Families begin to demand housing,
Read MoreMarket Structures, Demand, Supply, and Monopoly Dynamics
Types of Market Structures
- Perfect Competition: Many buyers and sellers trading a homogeneous good.
- Monopoly: A single seller offers a good with no close substitutes.
- Oligopoly: A few producers control the market for a largely homogeneous good.
Factors Influencing Demand
The quantity demanded of a good depends on several factors:
- Price of the Good: Generally, the quantity demanded increases as the price decreases (Law of Demand).
- Prices of Other Goods:
- Substitutes: Demand for a good increases when the price
Macroeconomics Explained: Growth, Employment, and Stability
Macroeconomics: An Overview
Macroeconomics: A branch of economics that studies the problems of a country from an aggregate or overall perspective. It encompasses the following key problems:
- Growth: Economic growth creates jobs, improves living standards, and increases tax revenue, enabling the state to deliver better public services.
- Employment: Unemployment is a major problem for any country.
- Price Stability: Significant price increases (inflation) cause imbalances in the economy and harm individuals.
1929 Stock Market Crash, Great Depression & Global Responses
Stock Market Crash of 1929
The collapse of the New York Stock Exchange was the catalyst for the economic crisis. The causes included:
- The crisis in traditional industrial sectors such as textiles, coal, steel, and shipbuilding. Agriculture faced similar difficulties.
- Industry sectors initially favored by expansion experienced the consequences of declining purchasing power by 1927. The situation was aggravated because the purchase of these consumer goods was often done on credit.
- A crisis emerged in