Understanding 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 MoreMonopoly Pricing Strategies and Price Discrimination
Monopoly Regulation Challenges
Regulating monopolies is often challenging in the real world. The main problem is that regulators do not have all the information necessary to determine the exact price point where the demand curve intersects the average total cost curve. Sometimes they set it too low, causing supply shortfalls; sometimes they set it too high. Moreover, regulated monopolies tend to overstate their costs to regulators and to provide consumers with inferior products.
In short, sometimes
Read MoreCost Accounting System: Features, Types, and Process
**Cost Accounting System Process**
1. Features
- They are used in companies manufacturing in series, similar or homogeneous products, where the final product is the result of several successive processes.
- It is a cost accumulation method that can calculate averages for each period (daily, weekly, monthly, or yearly) for each element of cost.
- The application of this methodology is piped through cost centers, which shall monitor the consumption of the components of costs absorbed by each process or department,
Key Economic Concepts: Scarcity, Markets, and Systems
Key Economic Concepts
Scarcity: There is not enough of an item to satisfy everyone who wants it.
Steps to the Scientific Method
Observe a problem; make assumptions; develop a model, theory, hypothesis, or law; make predictions; test model & predictions.
Common Fallacies
- Fallacy of Composition: Wrongly concluding that what’s right for one person is right for everyone.
- Fallacy of Association/Causation: Wrongly concluding that what’s happening is based off something else.
- Fallacy of Division: Wrongly