Economic Circuit and Factors of Production
Economic Circuit
The economic circuit describes the flow of resources and money within an economy. Families provide labor (land, capital) and purchase goods and services from companies. Companies pay salaries to families for their labor and charge for goods and services. Both families and companies pay taxes to the state, which in turn provides public services and infrastructure. Families may deposit savings in banks, which then lend to companies for investment.
Economic Units
Economic units (families,
Read MoreFactors Influencing Income Balance and Interest Rates
Factors Influencing Income Balance and Interest Rates
An increase in the amount of money shifts the LM curve to the right; hence, the interest rate falls and income rises.
The increase in the stock of money creates an excess supply of money, which decreases the rate of interest. As the interest rate falls, investment demand increases, leading to an increase in revenue, with a further increase in consumption demand induced by income.
A decline in the stock of money makes the LM curve move to the left,
Company Fundamentals: A Comprehensive Guide to Business Structure, Operations, and Growth
1.Concepto and elements of the company.
• It is an organization that buys Ylos factors transformed to produce goods or services (corporations insustrial), or buy products and sell them at a higher price (commercial enterprises) or sell services (utilities).
Elements that make up this definition:
“Buy and use factors of production.
– Make efforts to production.
– Its goals are: to maximize profits, growth or value maximization.
– Coordination among members
– Sells its products in the market.
Social & Environmental Responsibility and Legal Framework of Business
Social and Environmental Responsibility
Since the company has a decisive influence in society, it should have certain responsibilities.
Social costs are caused by the private activities of the company but are supported by society as a whole.
Corporate Social Responsibility (CSR) refers to all the legal and ethical commitments that the company takes to care for and improve the impacts of its activities on the social, occupational, and environmental aspects.
Areas of Social Responsibility
These are the
Read MoreUnderstanding Key Financial and Accounting Terms
Depreciation
In economics and accounting, depreciation refers to the allocation of a tangible asset’s cost over its useful life. It represents the reduction in an asset’s value due to wear and tear, obsolescence, or other factors.
Grant
A grant is a non-repayable fund provided by a government entity or other organization to an individual, business, or another entity for a specific purpose. Grants do not require repayment and are often awarded based on merit or need.
Donation
A donation is a gift of money
Read MoreMarket Structures and Economic Indicators
Market Structures
Perfect Competition
Characteristics: Many bidders, no influence on price, clear barriers, homogeneous products, free external intervention, transparent information.
Imperfect Competition
Monopoly
Characteristics: One bidder, significant influence on price, closed barriers, homogeneous product, intervened market, transparent information.
Procedure: Determine market demand, decide production quantity, set price to match demand.
Limits: Legal (patents, franchises), economic (control of factors,
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