10 Principles of Economics: A Comprehensive Guide
1. Individuals Face Tradeoffs
To get what we like, we usually have to give up something else. This creates choices between different goals. Societies face tradeoffs like “guns vs. butter”—more defense spending means less spending on consumer goods. Businesses balance efficiency (maximizing resources) and equity (distributing benefits fairly).
2. The Cost of Something Is What You Give Up to Get It
Decision-making involves comparing costs and benefits. The opportunity cost of something is what you
Read MoreComprehensive Guide to Business Management & Accounting
Business Management
Inventory Management
Stock Types
- Raw Materials: Items requiring processing to become finished goods.
- Semi-finished Goods: Manufactured products requiring further processing.
- Finished Goods: Products ready for sale without further transformation.
Stockout
Stockout: The cost incurred by a company when inventory runs out.
Inventory Management Techniques
- Inventory Control: Requires monitoring minimum, maximum, and safety stock levels.
- Reorder Point: The inventory level at which new orders
Theories of the Employer: Risk, Control, and Innovation
Item 2: The Employer
Historical Review
In the mid-nineteenth century (when economists were starting to follow and analyze the separable functions of capitalist and entrepreneur) the employer was conceptualized as:
- A man whose ultimate goal is to make money.
- The one who organizes and directs the combined factors of production for products sold in the market.
- The confident and adventurous individual who assumes the “risk” securing a rent to the “undecided” or “shy”.
- An “innovator”.
- A man of action, practical,
The Evolution of the Employer: From Capitalist to Technocrat
The Evolution of the Employer
18th Century: The Capitalist
Adam Smith (1723-1790) described the employer as a capitalist owning the means of production during the Industrial Revolution.
19th Century: The Businessman
Richard Cantillon (1680-1734) viewed the entrepreneur as a businessman who buys means of production and resells at uncertain prices, assuming business risks. Jean-Baptiste Say (1767-1832) believed production value should cover all production costs and ensure profit.
Late 19th Century: The
Read MoreEconomic Activities, Production & Sectors: A Comprehensive Guide
Economic Activities and Production
Definition of Economic Activities
Economic activities are all the processes used to obtain the goods and services that people need.
Production
Production encompasses all the goods and services created as a result of an economic activity.
Distribution
Distribution is the process of moving goods and services from the place of production to the consumer.
Consumption
Consumption includes all the goods and services that people buy to satisfy their wants and needs.
Payment Methods
Read MoreFringe Benefit Tax (FBT) Guide: Calculations, Examples & Compliance in New Zealand
Fringe Benefit Tax (FBT) Guide
Calculating FBT in New Zealand
Understanding FBT Quarters
First Quarter (Q1): January – March (90 or 91 days)
Second Quarter (Q2): April – June (91 days)
Third Quarter (Q3): July – September (92 days)
Fourth Quarter (Q4): October – December (92 days)
FB Value of Free or Discounted Goods/Services
Formula: Market Value (or Cost) – Amount Paid by the Employee
Example: If a product’s price is lower than the retail price or below the manufacturing cost, it’s considered a benefit.