Understanding Economic Indicators and Fluctuations
Consumer Price Index (CPI) and GDP Deflator
The Consumer Price Index (CPI) measures the average change in prices paid by urban consumers for a basket of consumer goods and services. However, it’s an imperfect measure of the cost of living because it doesn’t account for consumer substitutions to cheaper goods, increased purchasing power from new goods, or unmeasured quality changes. Consequently, the CPI tends to overstate true inflation.
The GDP deflator is another measure of the general price level.
Read MoreLow Price and Product Competition: A Theoretical Guide
Low Price and Product Competition
Theoretical Support Guide #8
We analyzed the theories of supply and demand separately, establishing the origin and assumptions about demand and supply curves. Now, we use a model under perfect competition to see how it determines product price and quantity within a given market period, both short-term and long-term.
Definition of Perfect Competition
A market is perfectly competitive if:
- A large number of buyers and sellers exist, each too small to affect the product
Economics: Supply, Demand, and Market Analysis
Summary of Mochón and Becker
Unit 1: Economics as Science
Chapter 1: The Objective of Economics
Economics studies how societies manage scarce resources to produce and distribute goods and services among individuals, fulfilling human needs and desires.
Types of Goods
- Free goods: Unlimited and not owned.
- Economic goods: Scarce in relation to desires.
Depending on their nature:
- Capital goods: Used to produce other goods.
- Consumer goods: For direct satisfaction of needs.
- Durable: Extended use.
- Non-durable: Affected
International Economics Strategies and Balance of Payments
Import Substitution
Import substitution aims to stimulate local industry by protecting it from international competition. By placing tariffs on more expensive imported goods, local production is stimulated, and domestic demand is reserved for domestic products.
The economic rationale for this strategy is the infant industry argument. In sectors with significant economies of scale and dynamic economies, established industries in industrialized countries have a competitive advantage over nascent industries.
Read MoreSpanish Economy During & After Civil War (1936-1950)
1. The Spanish Economy During the Civil War (1936-1939)
The Spanish Civil War erupted due to the failure of the coup led by Franco. Both resulting governments focused on mobilizing resources to finance the war.
Franco’s Advantages
Franco’s side retained control of the army and its senior ranks. They also held the agricultural lands and gained the support of businesses and significant capital. Crucially, they received substantial military support from Germany and Italy, while Great Britain remained
Read MoreDistribution Channels and Supply Chain Management
Distribution Channels
Concepts
Inbound Logistics: The manufacturing process’s supply with raw materials and components.
Outbound Logistics: The physical distribution of finished products from the manufacturer to the final consumer.
These concepts have great economic importance as they are associated with new industry installations.
End Point of Physical Distribution
- Retail store
- Direct delivery to the consumer
Those responsible for operating physical distribution handle predominantly material elements:
- Warehouses
- Transport