Understanding Market Dynamics: Supply, Demand, and Pricing
Item 3: Market Fundamentals
A market is a set of offers of certain goods or services, which are accompanied by their corresponding demands.
Demand
Demand is the amount of an asset that a potential buyer (applicant) would be willing to buy at a specified price during a certain period.
Four factors influencing demand:
- Price of the good
- Applicant’s income level
- Prices of other related goods
- Consumer preferences
The demand curve is a graphical representation of the relationship between the price of goods and
Read MoreUnderstanding Company Classifications and Resources
Company Definitions and Classifications
Company: An organization or group performing commercial and industrial activities that provide goods and services to maintain and improve the quality of life of commercial law personas. According to commercial law, companies are defined as industrial, commercial, services, and related entities, engaging in what are called commercial acts.
Classification of Companies
According to Their Activity:
- Agriculture: Exploits agricultural and livestock products (livestock,
International Trade Theories and Globalization Waves
International Trade Theories: From Mercantilism to Modern Globalization
The Mercantilists, 1500-1800:
- Minimize imports and maximize exports, generating a net inflow of foreign exchange and maximizing the country’s gold stocks.
- The world’s wealth was considered fixed.
- Gains from trade were believed to be at the expense of trading partners.
Adam Smith and Absolute Advantage
- Smith argued that the world’s wealth is not a fixed quantity.
- All countries can benefit from international trade.
Principle of
Read MoreLeveraged Buyouts, EV/EBITDA, and Private Equity Insights
Leveraged Buyouts: An Overview
Leveraged Buyout (LBO): A financial transaction where a company is acquired using a significant amount of borrowed funds to cover the acquisition cost.
Key Drivers of LBOs
- Target company valuation (attractiveness and valuation)
- Debt Financing (terms of debt financing)
- Equity investment
- Market and economic conditions
- Due Diligence (legal, financial impact)
- Management team
- Exit Strategy
Success Factors
The success or failure of a deal impacts ROI, but several factors contribute
Read MoreEU Integration and Expansion: Spain, Eastern Countries, and Beyond
Integration and Expansion Processes: Case Studies
Integration of Spain (1986)
What Was Expected?
On the eve of integration, the average tariff applied to imports from Spain to the EEC was almost three times that lay on Spanish products that complied with this market. It was envisaged that the dismantling of tariffs would encourage more growth in imports than for intra-EU exports made by Spain.
In addition, the Spanish tariff against imports from the rest of the world greatly exceeded the TEC. Therefore,
Read MoreUnderstanding Key Economic Concepts and Principles
Displacement Curve Situations of Supply: Graph
Several factors can shift the supply curve:
- Price of Production Factors: If the price of production factors, such as fertilizer, decreases, farmers are willing to produce more grain at the same price.
- Existing Technology: Technological improvements reduce production costs, increasing supply.
- Number of Suppliers: An increase in the number of firms increases the overall supply.
- Prices of Related Goods:
- Substitute Goods
- Complementary Goods
- Expectations: Market