Key Concepts in Microeconomics
Microeconomics Concepts and Principles
Production Functions with Perfect Substitute Inputs
For perfect substitute inputs, the production function is: X = Y1 + Y2
Constant Returns to Scale
With constant returns to scale, proportional increases in all factors lead to a proportional increase in output.
Zero Fixed Costs
If fixed costs are zero, average variable costs and average total costs will be equal.
Demand Curve with Positive Price Elasticity
A demand curve with a positive direct price elasticity (not
Read MoreLocal Government Finance: Taxes, Expenditures, and Fiscal Policy
Functions of Government Expenditures
Government expenditures contribute to:
- Current effective demand
- A coordinated impulse on the economy, which can be used for stabilization and growth purposes
- Increases in the public endowments of goods for everyone
- Positive externalities to the economy and society, especially through its capital component
Oates’ Decentralization Theorem
For a public good, the consumption of which is defined geographically and for which the costs of providing each level of output in
Read MoreUnderstanding Double Entry, Funding, and Financial Statements
The Method of Double Entry
The method of double entry affects movement in at least two accounts, representing a movement and a debtor-creditor relationship. Double entry is the essence of current accounting and an integral part of the equity equation. It’s based on the economic fact that all originates in another fact of equal value but opposite in nature. For example, when lending money, the recipient has an obligation. Things do not just happen; each value is the result of an action or economic
Read MoreStrategic Vendor Selection and Procurement Process
Vendor Selection and Procurement Process
Information We Request from Suppliers
Once we compile a list of potential suppliers, we contact them by letter or in person to request the necessary information. The information focuses on three key aspects:
- Economic Conditions: Price per unit per lot, commercial discounts, rebates and implementation, packaging costs, transportation costs and insurance, payment, and deferment fees.
- Technical Conditions: Technical specifications, quality, special packaging, assembly
Demand, Supply, Market Structures, and Macroeconomics
Demand
Demand is the amount of an asset that a potential buyer is willing to acquire at a given price during a specific period.
Factors Influencing Demand
- Price of the good: The higher the price, the lower the demand.
- Prices of complementary goods: When the price of a complementary good increases, demand for the original good decreases.
- Prices of substitute goods: When the price of a substitute good increases, demand for the original good increases.
- Consumer preferences: When a consumer’s preferences
Spain’s Economic Transformation: From Rural Exodus to EU Integration
Spain’s Post-War Economic and Social Transformations
Rural Exodus and Agricultural Modernization
The shift from a primarily agrarian society marked a significant turning point. Diminished cheap labor and a shrinking domestic market spurred modernization. Key developments included:
- Rural Exodus: Migration to urban areas led to increased agricultural wages.
- Production Increase: Agricultural output tripled, but its share of total exports decreased.
- Shifting Demand: Rising living standards altered consumption