The legalese and procedures up-front: "This wikireader comes from
http://GloBBA12.SI/wiki/Economics under the clauses of CC BY-SA and may be occasionally refreshed therefrom. i.e. kindly ask to edit there if you see something wrong in Jubo-jubo's wikireader. Thank you for observing."
fi:Taloustiede on
yhteiskuntatiede, joka tutkii lähinnä
taloudellisia päätöksiä tekevien toimijoiden kannustimia ja käyttäytymistä, sekä niiden perusoletuksista johdettuilla malleilla ja teorioilla erilaisia taloudellisia ilmiöitä. Tavallisia tutkimuksen kohteita ovat
hyödykkeiden kulutus, tuotanto ja allokointi,
markkinoiden toiminta sekä aina kokonaistalouteen liittyvät kysymykset kuten
talouskasvu ja
inflaatio. Suomeksi taloustiedettä sanotaan myös
kansantaloustieteeksi erotuksena
liiketaloustieteestä. ( Suomen kielinen Wikipedia )
w:Outline of economics is a good introductory text to economics if you don't know what it comprises and what kind of issues it deals with.
w:Microeconomics (
w:fi:Mikrotaloustiede ) (from Greek prefix micro- "μικρό" meaning "small" + "economics"- "οικονομια") is a branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources. ( Wikipedia )
w:Macroeconmics (
w:fi:Makrotaloustiede ) (from Greek prefix "makros-" meaning "large" + "economics") is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. ( Wikipedia )
w:Market equilibrium (
w:fi:Taloudellinen tasapaino ) refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. ( Wikipedia ) Market equilibrium is where the
w:demand curve and the supply curve intersect.
The w:demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. ( Wikipedia ).
The w:law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (w:ceteris paribus). ( Wikipedia )
w:Normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive
w:income elasticity of demand. ( Wikipedia ) vs. an w:inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. ( Wikipedia )
Week 44 - Economies of scale, utility, elasticities
w:Economies of scale In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased.
w:Diseconomies of scale are the forces that cause larger firms and governments to produce goods and services at increased per-unit costs. The concept is the opposite of economies of scale. ( Wikipedia )
In economics, w:returns to scale (
w:fi:Skaalaetu ) and economies of scale are related terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable (chosen by the firm).
w:Utility (
w:fi:Hyöty ) to
w:consumer is a representation of preferences over some set of goods and services. ( Wikipedia )
w:Marginal utility (
w:fi:Rajahyöty ) - In economics, the marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. ( Wikipedia )
w:Price elasticity of demand (
w:fi:Kysynnän hintajousto ) (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. ( Wikipedia )
w:Price elasticity of supply (PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price. ( Wikipedia )
w:Cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. ( Wikipedia )
A w:production function (
w:fi:Tuotantofunktio ) is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. ( Wikipedia )
w:Marginal product of labor also known as MPL is the change in output that results from employing an added unit of labor.( Wikipedia )
w:Marginal cost (
w:fi:Rajakustannus ) is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good. ( Wikipedia )
w:Average cost or unit cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variable costs (total variable costs divided by Q) plus average fixed costs (total fixed costs divided by Q). ( Wikipedia )
w:Market structure is the number of
firms producing identical
products which are homogeneous. The types of market structures include the following:
w:Monopolistic competition (
w:fi:Monopolistinen kilpailu ) , also called competitive market, where there is a large number of firms, each having a small proportion of the market share and slightly differentiated products.
w:Oligopoly (
w:fi:Oligopoli ) , in which a market is dominated by a small number of firms that together control the majority of the market share.
w:Duopoly, a special case of an oligopoly with two firms.
w:Monopsony, when there is only one buyer in a market.
w:Oligopsony, a market where many sellers can be present but meet only a few buyers.
w:Natural monopoly, a monopoly in which
w:economies of scale cause efficiency to increase continuously with the size of the firm. A firm is a natural monopoly if it is able to serve the entire market demand at a lower cost than any combination of two or more smaller, more specialized firms.
All definitions of market structure from Wikipedia article
w:market structure
The w:Herfindahl index (
w:fi:Herfindahlin indeksi ) (also known as Herfindahl–Hirschman Index, or HHI) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. ( Wikipedia )
w:Game theory (
w:fi:Peliteoria ) is a study of strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."
w:Gross domestic product (GDP) (
w:fi:Bruttokansantuote ) is the market value of all officially recognized final goods and services produced within a country in a given period of time. ( Wikipedia )
w:Circular flow of income or circular flow refer to a simple economic model which describes the reciprocal circulation of income between producers and consumers. ( Wikipedia ) which is used to calculate the GDP.
w:Business cycle (or economic cycle) (
w:fi:Suhdannevaihtelu ) refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (an expansion or boom), and periods of relative stagnation or decline (a contraction or recession). ( Wikipedia )
w:Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. ( Wikipedia )
w:Normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive income elasticity of demand. ( Wikipedia )
Chapter 6
A
w:budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. ( Wikipedia )
A
w:Giffen good (
w:fi:Investointi ) is one which people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Giffen good situation, the income effect dominates, leading people to buy more of the good, even as its price rises. ( Wikipedia )
In economics and business, a
w:network effect (
w:fi:Verkostovaikutus ) (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people.
w:Path dependence (
w:fi:Polkuriippuvuus ) explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant. ( Wikipedia )
w:Sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered. ( Wikipedia )
Chapter 10
w:Allocative efficiency (
w:fi:Allokointitehokkuus ) is a type of economic efficiency in which economy/producers produce only those types of goods and services that are more desirable in the society and also in high demand.( Wikipedia )
Chapter 13
w:Potential output (also referred to as "natural gross domestic product" or "Potential GDP")) refers to the highest level of real Gross Domestic Product output that can be sustained over the long term. ( Wikipedia + term Potential GDP as per book )
Chapter 16
w:Procyclical is a term used in economics to describe how an economic quantity is related to economic fluctuations. It is the opposite of countercyclical. However, it has more than one meaning. ( Wikipedia )
w:Monetarism (
w:fi:Monetaristinen taloustiede ) is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over longer periods and that objectives of monetary policy are best met by targeting the growth rate of the money supply. ( Wikipedia )
Business cycles (or economic cycles) refer to economy-wide fluctuations in production, trade and economic activity in general over several months or years in an economy organized on free-enterprise principles. ( Wikipedia )
Monetarism is a school of economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within
monetary economics that variation in the
money supply has major influences on
national output in the short run and the
price level over longer periods and that objectives of
monetary policy are best met by targeting the growth rate of the
money supply. ( Wikipedia )
w:Exchange rate policy or an exchange-rate regime is the way an authority manages its
currency in relation to other currencies and the
foreign exchange market. It is closely related to
monetary policy and the two are generally dependent on many of the same factors. ( Wikipedia )
Factors of production are the inputs to the production process. Finished goods are the output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a
production function. There are three basic (AKA classical) factors of production: land,
labor,
capital( Wikipedia )
Gross domestic product (GDP) is the
market value of all officially recognized final goods and services produced within a country in a given period of time. GDP
per capita is often considered an indicator of a country's
standard of living ( Wikipedia )
Terms of trade (TOT) refers to the relative price of exports in terms of imports. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods. ( Wikipedia )
Devaluation in modern
monetary policy is a reduction in the value of a
currency with respect to those goods, services or other monetary units with which that currency can be exchanged. ( Wikipedia )
Heckscher–Ohlin theorem is one of the four critical theorems of the Heckscher–Ohlin model. It states that a country will export goods that use its abundant factors intensively, and import goods that use its scarce factors intensively.
Vernon's
Product life-cycle theory is an economic theory that was developed by Raymond Vernon in response to the failure of the
Heckscher-Ohlin model to explain the observed pattern of
international trade. The theory suggests that early in a product's life-cycle all the parts and labor associated with that product come from the area in which it was invented. After the product becomes adopted and used in the world markets, production gradually moves away from the point of origin. ( Wikipedia )
Economies of scope are conceptually similar to
economies of scale. Whereas economies of scale for a firm primarily refers to reductions in the
average cost (cost per unit) associated with increasing the scale of production for a single product type, economies of scope refers to lowering the
average cost for a firm in producing two or more products.
In economics, internalization can refer to the practice of multinational enterprises (MNEs) to execute transactions within their organization rather than relying on an outside market. ( Wikipedia )
The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-Framework. It is a further development of the theory of internalization and published by John H. Dunning in 1980. ( Wikipedia )
) An export house buys products from a domestic firm and sells them abroad on its own account ( teacher )
) A w:confirming house is a specialised UK agency that purchases and arranges the
w:export of goods on the behalf of overseas buyers. They finance the movement of goods into the country by offering short-term credit to importers and guaranteeing, or confirming, payment to the suppliers in the suppliers own domestic currency. The confirming house usually negotiates the price with the suppliers, ships, insures and provides information on the goods on the overseas buyers behalf. ( Wikipedia )
) A buying house performs similar functions to those of the confirming house but is more active in seeking out sellers to match the buyer’s particular needs ( teacher )
In direct exporting a firm is distributing and selling its own products to the foreign market
[[d:Special:EntityPage/QA COMMERCIAL POLICY (ALSO REFERRED TO AS A TRADE POLICY OR INTERNATIONAL TRADE POLICY) IS A SET OF RULES AND REGULATIONS THAT ARE INTENDED TO CHANGE INTERNATIONAL
TRADE FLOWS, PARTICULARLY TO RESTRICT
IMPORTS.| (QA COMMERCIAL POLICY (ALSO REFERRED TO AS A TRADE POLICY OR INTERNATIONAL TRADE POLICY) IS A SET OF RULES AND REGULATIONS THAT ARE INTENDED TO CHANGE INTERNATIONAL
TRADE FLOWS, PARTICULARLY TO RESTRICT
IMPORTS.)]]
Finance is the science of funds management, or the allocation of
assets and liabilities over time under conditions of certainty and uncertainty. A key point in finance is the
time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories:
public finance,
corporate finance and
personal finance. ( Wikipedia )
What financial managers do?
Financial analysis (also referred to as financial statement analysis or accounting analysis or Analysis of finance) refers to an assessment of the viability, stability and profitability of a
business, sub-business or
project. ( Wikipedia )
A futures contract (more colloquially, futures) is a standardizedcontract between two parties to buy or sell a specified asset of standardized quantity and quality for a price agreed upon today (the futures price or
strike price) with delivery and payment occurring at a specified future date, the delivery date. ( Wikipedia )
A forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today. ( Wikipedia )
Balance of payments (BoP) accounts are an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of
goods,
services,
financial capital, and
financial transfers. ( Wikipedia )
Current account is one of the two primary components of the
balance of payments, the other being
capital account. It is the sum of the
balance of trade (i.e., net revenue on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers. ( Wikipedia )
Capital account (also known as financial account) is one of two primary components of the
balance of payments, the other being the
current account. Whereas the current account reflects a nation's net income, the capital account reflects net change in ownership of national assets. ( Wikipedia )
A
futures market, a futures exchange or futures market is a central financial exchange where people can trade standardized
futures contracts; that is, a contract to buy specific quantities of a
commodity or
financial instrument at a specified price with
delivery| set at a specified time in the future. ( Wikipedia )
Arbitrage is the practice of taking advantage of a price difference between two or more
markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the
market prices. ( Wikipedia )
Week 41 - Exchange rate risk, risk and risk management
Risk is the potential of loss (an undesirable outcome, however not necessarily so) resulting from a given action, activity and/or inaction. ( Wikipedia )
Risk management is the identification, assessment, and prioritization of
risks| (defined in
ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events ( Wikipedia )
importer that must pay its currency trade loan within 30 days: borrow in home currency (€, 30 days), buy the foreign exchange on the spot market ($), invest in foreign exchange (in New York, for 30 days), use foreign currency for paying the trade loan ($, after 30 days), and repay the domestic currency debt (€, after 30 days)
exporter that receives a foreign-currency payment after 60 days: borrow in the foreign currency that is to received ($, 60 days), sell the borrowed foreign currency spot ($ à €), invest or otherwise employ domestic currency at home (€, 60 days), receive the payment from abroad ($ after 60 days), and repay the foreign currency debt with export earnings ($ after 60 days)
hedging via
currency of invoicing – by
invoicing in own currency: no transaction risk nor exposure but the economic exposure still remains (if exchange rates change, the customer abroad faces changed prices, and according to price elasticity, the quantity demanded will change)
hedging via
mixed-currency invoicing –
composite currency (SDR), currency baskets (e.g. ½ dollars, ½euros) or ”cocktails”, usually this results in risk and exposure reduction since they offer some diversification risk (if the value of dollar goes up, usually the value of euro goes down)
hedging via selection of supplying country: sourcing – use domestic inputs or inputs from EMU-area