...Chapter 03 - Markets, Organizations, And The Role Of Knowledge CHAPTER 3 MARKETS, ORGANIZATIONS, AND THE ROLE OF KNOWLEDGE CHAPTER SUMMARY This chapter answers three primary questions: How do market systems work? What are the relative advantages of market systems compared to central planning in large economies? Why do we observe so much economic activity conducted within firms in market economies? In addition to covering the basic principles of exchange and supply-and-demand analysis, the chapter introduces two concepts that are critical to the subsequent development in the book: specific knowledge and contracting costs. The chapter also makes the important point that individuals have incentives to choose value-maximizing organizational arrangements. An appendix presents the basics of present value analysis and the valuation of common stock. It also discusses the concept of stock market efficiency. This appendix provides useful background material (for example, when instructors want to discuss the stock market reactions to events). CHAPTER OUTLINE GOALS OF ECONOMIC SYSTEMS PROPERTY RIGHTS AND EXCHANGE IN A MARKET ECONOMY Dimensions of Property Rights Managerial Application: Patent for Priceline.com Managerial Application: Property Rights Insecurity in Columbia Gains from Trade Managerial Application: While Animosity between the Governments of Venezuela and the U. S. Grow, So Does Trade Managerial Application: Strategic Business Planning—Ignoring Economics of Trade Academic...
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...BASIC ECONOMIC CONCEPTS LESSON 1: BASIC ECONOMIC CONCEPTS By the end of this lesson, you should be able to • • • • • give an overview of Economics deal with the Economic Problem discuss the Methodology in Economics differentiate between Microeconomic Issues and Macroeconomic Issues 1.1 WHAT IS ECONOMICS? Some opinions: “Supply and Demand - that’s all there is to economics. The rest is nonsense.” “Economics is about what everyone knows in a language that nobody understands.” “Economics explains the price of everything and the value of nothing.” “Economists are quite unique in their failure to solve a single one of the problems of their profession.” John Papworth Economist– the one profession where you can gain great eminence without ever being right.” George Meany While these views / opinions of economics / economists contain some element of truth, they hardly give a meaningful insight into the nature of the subject and the work of economists. What is Economics? Many definitions have been offered for Economics. Mostly, they focus on two inter-related approaches to the above question: 1. 2 the problems that Economics deals with; and the methods that economists use in dealing with these problems. An example of the ‘problem’ type of definition is given below: “Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.” Lord Robbins 1929 Simply put, Economics can be defined as the social science which studies...
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...Part 3 Fundamentals of Financial Institutions Chapter 7 Why Do Financial Institutions Exist? Chapter Preview A vibrant economy requires a financial system that moves funds from savers to borrowers. But how does it ensure that your hard-earned dollars are used by those with the best productive investment opportunities? Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-3 Chapter Preview In this chapter, we take a closer look at why financial institutions exist and how they promote economic efficiency. Topics include: •Basic Facts About Financial Structure Throughout the World •Transaction Costs •Asymmetric Information: Adverse Selection and Moral Hazard Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-4 Chapter Preview (cont.) • The Lemons Problem: How Adverse Selection Influences Financial Structure • How Moral Hazard Affects the Choice Between Debt and Equity Contracts • How Moral Hazard Influences Financial Structure in Debt Markets • Conflicts of Interest Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-5 Basic Facts About Financial Structure Throughout the World • The financial system is a complex structure including many different financial institutions: banks, insurance companies, mutual funds, stock and bonds markets, etc. Copyright ©2015 Pearson Education, Inc. All rights reserved. 7-6 Basic Facts About Financial Structure Throughout the World • The chart on the next slide shows how nonfinancial business attain...
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...CHAPTER I- NATURE, SCOPE AND METHODOLOGY IN ECONOMICS NATURE OF ECONOMICS ECONOMICS- Comes from the Greek oikonomia means management of a household, administration is a social science that deals with efficient allocation of scarce resources to satisfy the unlimited wants and needs. SOCIAL SCIENCE Is the field of scientific knowledge and academic scholarship that explore social groups and, more generally, human society RESOURCES Things use to produce other things to satisfy people wants WANT is something that is desired. It is said that people have unlimited wants, but limited resources NEED Is something that is necessary for survival (such as food and shelter) SCOPE OF ECONOMICS TWO MAJOR BRANCHES OF ECONOMICS MACROECONOMICS Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors MICROECONOMICS Looks at specific economics units. At this level of analysis, the economist observes details of an economics unit, or very small segment of the economy ANALYTICAL TOOLS AND M ETHODOLOGY USED IN ECONOMICS rational self-interest means that given a certain condition, individuals try to minimize the expected cost for a benefit or maximize the expected benefit with a cost. Opportunity cost It is cost associated with opportunities that are foregone when...
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...SYLLABUS INDIAN BUSINESS ENIRONMENT MBA–2nd SEMESTER, M.D.U., ROHTAK External Marks : 70 Time : 3 hrs. Internal Marks : 30 UNIT-I Nature, components and determinatnts of business environment; basic nature of Indian economic system; relation size and growth of public and private corporate sector, social responsibility of business; broad features of India's now economic policy. UNIT-II Trend and pattern of industrial growth; review of industrial policy developments; industrial licensing policy; liberalisation of the private sector; trends and issues in corporate management; growth and problems of the small scale sector; public sector reforms and privatisation the problem of industrial sickness; MRTP Act, SICA and Industrial Disputes Act. UNIT-III Development banks for corporate Sector (IDBI, IFCI, ICICI) - trends pattern and policy; regulation of stock exchanges and the role of SEBI; banking sector reforms, challenges facing public sector banks; growth and changing structure of non bank financial institutions; problem of non performing assets in Indian Banks. UNIT-IV Trend and pattern of India's foreign trade and balance of payments; latest EXIM policy-main features; policy towards foreign direct investment; globalisation trends in Indian economy; role of MNC's; India's policy commitments to multilateral insitiutions - IMF, World Bank and WTO. NOTE : The question paper will be set by the external examiners. The external examiner will set 8 questions...
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...EXAMINATIONS COUNCIL Caribbean Advanced Proficiency Examinations Economics Syllabus Effective for examinations from May/June 2010 Correspondence related to the syllabus should be addressed to: The Pro-Registrar Caribbean Examinations Council Caenwood Centre 37 Arnold Road, Kingston 5, Jamaica, W.I. Telephone Number: (876) 920-6714 Facsimile Number: (876) 967-4972 E-mail address: cxcwzo@cxc.org Website: www.cxc.org Copyright © 2008, by Caribbean Examinations Council The Garrison, St. Michael BB 11158, Barbados CXC A20/U2/08 This document CXC A20/U2/08 replaces CXC A20/U2/03 issued in 2003. Please note that the syllabus was revised and amendments are indicated by italics and vertical lines. First Issued 2003 Revised 2008 Please check the website www.cxc.org for updates on CXC’s syllabuses. CXC A20/U2/08 Contents RATIONALE ........................................................................................................................................... 1 AIMS ....................................................................................................................................................... 2 SKILLS AND ABILITIES TO BE ASSESSED ....................................................................................... 2 PRE-REQUISITES OF THE SYLLABUS .............................................................................................. 3 STRUCTURE OF THE SYLLABUS ...........................................
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...Endogenous growth theory addressed limitation associated with the neo classical growth model. To what extent is this assertion valid? Introduction Neo classical growth model is an approach in economics focusing on the determination of price, output and income distributions in markets through supply and demand. These is done through a hypothesized maximization of income- constrained utility by individuals and of cost constrained profits of firms employing available information and factors of production. This economic model was developed from the classical school of economics, which was dominant in the eighteenth and nineteenth centuries. It can be traced to the marginal revolution of the 1860’s, which came up with the concept of utility as a key factor in deterging value in contrast to the classical views that the costs involved in production were value’s determinant. The Neo classical approach became increasing mathematical, focusing on the perfect competition and equilibrium. Neo classical growth model considered two factors production function with capital and labour as determinants of output. Besides, it added exogenously determined factor, technology, to the production function. Neo classical growth model uses this production function: Y=AF (K, L)……….(1) Y= Gross Domestic Production (GDP) K= Stock of Capital L= Amount of unskilled labour A= Exogenously determined level of technology. *Note a change in this exogenously variable and technology...
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...National Institute of Business Management Chennai - 020 FIRST SEMESTER EMBA/ MBA Subject : Principles of Economics Attend any 4 questions. Each question carries 25 marks (Each answer should be of minimum 2 pages / of 300 words) 1. What are the vital functions of an Economy? Explain the price mechanism. 2. Explain measurement of Price Elasticity of Demand. 3. Describe the kinds of Economic Systems. 4. Price mechanism also known as the market mechanism, that helps to solve the central problems in Capitalist Economy. Explain. 5. What are the factors governing Price Elasticity of Demand? Explain. 6. Explain economic systems and resource allocation. 25 x 4=100 marks 2.Explain measurement of Price Elasticity of Demand. Ans) Price elasticity of demand is a measure used to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (i.e. holding constant all the other determinants of demand, such as income). Price Elasticity of Demand = (% Change in Quantity Demanded)/(% Change in Price) Three popular methods for measuring price elasticity of demand are discussed below: 1. Percentage method The percentage method measures price elasticity of demand by dividing the percentage change in amount...
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...SYLLABUS INDIAN BUSINESS ENIRONMENT MBA–2nd SEMESTER, M.D.U., ROHTAK External Marks : 70 Time : 3 hrs. Internal Marks : 30 UNIT-I Nature, components and determinatnts of business environment; basic nature of Indian economic system; relation size and growth of public and private corporate sector, social responsibility of business; broad features of India's now economic policy. UNIT-II Trend and pattern of industrial growth; review of industrial policy developments; industrial licensing policy; liberalisation of the private sector; trends and issues in corporate management; growth and problems of the small scale sector; public sector reforms and privatisation the problem of industrial sickness; MRTP Act, SICA and Industrial Disputes Act. UNIT-III Development banks for corporate Sector (IDBI, IFCI, ICICI) - trends pattern and policy; regulation of stock exchanges and the role of SEBI; banking sector reforms, challenges facing public sector banks; growth and changing structure of non bank financial institutions; problem of non performing assets in Indian Banks. UNIT-IV Trend and pattern of India's foreign trade and balance of payments; latest EXIM policy-main features; policy towards foreign direct investment; globalisation trends in Indian economy; role of MNC's; India's policy commitments to multilateral insitiutions - IMF, World Bank and WTO. NOTE : The question paper will be set by the external examiners. The external examiner will set 8 questions in all, selecting not more...
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...because I believe that many things have changed since the last great power war in the 20th century. The League of Nations was the primary international institution after World War I. The United States however was not a member and the League of Nations, often failing to resolve conflicts in a diplomatic manner. Post World War II, many other international institutions were created which had the objective to manage the world economy and prevent another major war. These institutions included the International Monetary Fund (IMF), the World Bank, the European Union, North Atlantic Treaty Organization (NATO), and the World Trade Organization (WTO). The league of nations turned into the United Nations (UN), which today has a total of 193 member states. The UN suggests that every country has a desire to solve conflicts diplomatically first and not start a war immediately. In case a country has a conflict with another country , both can state their cases and opinions in front of the United Nations. The United Nations then tries to mediate between those countries and solve the conflict diplomatically without any military interactions. The other international institutions have similar approaches solving conflicts between member states. Essentially International institutions try to increase their membership, change their missions and visions, and expand their mandates. “These institutions, it is claimed, constrain the behavior of the most powerful countries and provide information and monitoring...
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...En The Economics of Money, Banking, and Financial Markets, 9e (Mishkin) – Global Edition Chapter 8 An Economic Analysis of Financial Structure 8.1 Basic Facts About Financial Structure Throughout the World 1) American businesses get their external funds primarily from A) bank loans. B) bonds and commercial paper issues. C) stock issues. D) loans from nonbank financial intermediaries. Answer: D Ques Status: Revised 2) Of the sources of external funds for nonfinancial businesses in the United States, loans from banks and other financial intermediaries account for approximately ________ of the total. A) 6% B) 40% C) 56% D) 60% Answer: C Ques Status: Previous Edition 3) Of the sources of external funds for nonfinancial businesses in the United States, corporate bonds and commercial paper account for approximately ________ of the total. A) 5% B) 10% C) 32% D) 50% Answer: C Ques Status: Previous Edition 4) Of the following sources of external finance for American nonfinancial businesses, the least important is A) loans from banks. B) stocks. C) bonds and commercial paper. D) loans from other financial intermediaries. Answer: B Ques Status: Previous Edition 5) Of the sources of external funds for nonfinancial businesses in the United States, stocks account for approximately ________ of the total. A) 2% B) 11% C) 20% D) 40% Answer: B Ques Status: Previous Edition 6) Which of the following statements concerning external...
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...Discussion on Tragedy of the Commons | This paper intends to discuss the basic theories within the scope of the tragedy of commons, especially from the ethics perspective. In addition, the paper also explicitly explores two possible ways to solve the tragedy of the commons, the free market solution and the socialism solution, and applies these ways to a real case of Euro’s Tragedy. In the end, referring to Elinor Ostrom’s theory in 2009, the paper recommends the collective agreement from the moral perspective to be the possible ideal solution to the tragedy of the commons. | | Contents 1. Introduction 1 2. Formation 2 2.1 Theoretical explain of the formation 2 2.2 Hardin’s grazing model 4 3. Ethics Involved 5 3.1 Ethical Egoism Theory 5 3.2 Utilitarian Theory 5 3.3 Moral Foundation Theory, Virtue Theory and Confucius 6 3.4 Right Theory 6 4. Solutions to the Tragedy 7 4.1 Free market solution 7 4.2 Socialism solution 9 4.3 Comparison of the Two Solutions 10 4.3.1 Attitude towards self-interest 11 4.3.2 Attitude towards common resources 11 4.3.3 Government Function 11 4.3.4 Incentive structures 11 4.3.5 Outcomes 12 5. Case of Euro’s Tragedy 12 5.1 How Euro’s Tragedy Happened 13 5.2 How it related to Tragedy of the Commons 14 5.3 Free Market Capitalism Solution and the Tragedy of Euro 14 5.4 Socialism Solution and the Tragedy of Euro 15 6. A Third Solution 17 6.1 Ethical Obligation 17 6.2 Cultivating Ethics 17 6.3 Elinor Ostrom’s Theory 18 ...
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...affecting companies. Study Session 1 Ethical and Professional Standards Reading Assignments 1.* “Code of Ethics and Standards of Professional Conduct” Standards of Practice Handbook, 9th edition (CFA Institute, 2005) * 2. “Guidance” for Standards I – VII, Standards of Practice Handbook, 9th edition (CFA Institute, 2005) * 3. Introduction to the Global Investment Performance Standards (GIPS®) Global Investment Performance Standards (GIPS®), pp. i–iii and 1–9, (CFA Institute, 4.* 2005) A. Preface: Background of the GIPS Standards B. I. Introduction C. II.0. Provisions of the Global Investment Performance Standards – Fundamentals of Compliance * 5. The Corporate Governance of Listed Companies: A Manual for Investors (CFA Institute, 2005) Learning Outcomes 1. “Code of Ethics and Standards of Professional Conduct” The Code of Ethics establishes the framework for ethical decision making in the investment profession. The candidate should be able to state the six components of the Code of Ethics. The Standards of Professional Conduct are organized into seven standards: I. Professionalism II. Integrity of Capital Markets III. Duties to Clients and Prospective Clients IV. Duties to Employers V. Investment Analysis, Recommendations, and Action VI. Conflicts of Interest VII. Responsibilities as a CFA Institute Member or CFA Candidate Each standard contains multiple provisions for which the candidate is responsible. The candidate should be able to...
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...Pattern) Time : 3 Hours] Instructions : (1) All questions are compulsory. (2) Figures to the right indicate full marks. [Max. Marks : 80 Q.1) Answer in 20 words each : (Any Ten) (1) (2) (3) (4) (5) (6) (7) (8) (9) Define Environment. Parallel Economy Causes of Regional Imbalance Economic Environment Two Examples of Topography affecting Business Infrastructure Conservation of Resources Sustainable Development Water Resource Management [20] (10) List down any two effects of Global Warming on India. (11) Mention any two examples about effect of Technology on Business Environment. (12) Kyoto Protocol (13) Noise Pollution [3874]-101 1 P.T.O. Q.2) Answer in 50 words each : (Any Two) (a) (b) (c) (d) Explain concept of Indian Business Environment. Explain in brief about Green House Effect. Describe effects of River Pollution. Mention causes of Regional Imbalance. [10] Q.3) Answer the following in 150 words each : (Any Two) (a) (b) (c) (d) Describe Impact of Climate on Business Environment. Discuss Causes of Poverty. Explain Role of Tradition in Setting of Business Development. Give brief account on types of Resources. [20] Q.4) Answer the following in 300 words each : (Any Two) (a) (b) (c) (d) Examine in detail need of Environmental Studies for Business. Explain Principles of Conservation of Resources for Sustainable Development. Critically examine importance of Technical, Educational and Legal Environment for Indian Business. Discuss about Environmental Problems related to Indian...
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...Write a 3-4 page paper in which you: 1.Describe the role of business in the economy. 2.Compare and contrast the roles of for-profit and nonprofit organizations in the economy. 3.Discuss the impact of current fiscal and monetary policy on the economy. 4. Select a product or service with which you are familiar and outline a strategy for accessing global markets. 5.Select an organization with which you are familiar and discuss the impact of that organization ’s level of social responsibility on a stakeholder group of your choice. My assignment must: •Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions. The specific course learning outcomes associated with this assignment are: •Distinguish between the major forms of business ownership and compare the advantages and disadvantages of each. •Define entrepreneurship and the nature and importance in the U.S. economy of small businesses. •Describe the basic accounting process and the financial statements used in business. •Explain the role of financial management, human resource management, and information management in a business. •Identify the basic components of the marketing process (product, promotion, pricing, and distribution). •Use technology and information resources to research issues in business. •Write clearly and concisely about business issues using proper writing...
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