Key Concepts in Economics, Business, and Ethics
Economic Ideologies
- Communism: An economic ideology where the government or state essentially owns and controls all major factors of production.
- Socialism: An economic ideology where the government or state plays a significant role in the economy.
- Capitalism: An economic ideology where businesses are privately owned, strong individual incentives exist, and the government plays a minimal role in the economy.
Intellectual Property
Intellectual Property: Property that is the product of intellectual rather
Read MoreKey Financial Terms and Concepts for Businesses
**Social Capital**
Social capital refers to the subscribed capital in commercial companies. It represents the value of contributions made by partners. In corporations, social capital is divided into shares.
**Reserves**
Reserves are retained earnings within a company. There are different types, including legal reserves, voluntary reserves, and statutory reserves.
**Journal Entry**
A journal entry is a mandatory accounting record in which all operations related to the company’s activities are recorded
Read MorePrice Floors and Ceilings: Market Impact and Risks
Price Floors and Ceilings: Understanding Market Intervention
What are Price Floors?
Price floors are minimum prices set by the government for certain commodities and services. They are implemented when the government believes that the market price is unfairly low, and producers need assistance. Price floors are only an issue when they are set above the equilibrium price, as they have no effect if they are set below the market-clearing price.
When a price floor is set above the market price, it can
Read MoreUnderstanding Money: Functions, Types, and Inflation
Functions of Money
- Medium of Exchange: Money serves as a medium of exchange, an intermediary that facilitates trade and specialization in production.
- Store of Value: The merchant who accepts our money in exchange for bread does not have to spend it immediately but can save it for when they need it. Money is a store of value, a means to keep wealth that allows us to save.
- Unit of Account or Measure: Money enables us to measure the value of goods and services. Everything is worth money.
Three Types of
Read MoreEconomic History: Malthusian Trap to Globalization
Malthusian Trap and Demographic Change
Why did economic growth stagnate in the past? In ancient demographic regimes, two main indicators were mortality and natality (migration is not included). Low life expectancy was a significant factor. But why was mortality so high? The reasons included infectious diseases, poor hygienic conditions, and malnutrition.
The Malthusian Trap
Malthus’ Basic Theory states that the power of population is indefinitely greater than the power in the earth to produce subsistence
Read MoreUnderstanding Economic Activity: Production, Marketing, and Consumption
What is Economic Activity?
Economic activity is the set of activities performed by humans tailored to meet their needs. That is, economic activities aim to produce goods and provide services people need or want.
Economic activity is also the quickest and least expensive way to obtain these products and services, as needs and desires can be unlimited, but resources are scarce and limited.
Once those assets are produced, it is required to distribute and sell them so that they reach those who need and
Read More