Applied Economics: Country & Industry Case Analyses
Section A: Ecuador’s Oil Analysis
Question 1: Economic Concepts for Ecuador
(a) Price Elasticity of Supply (PES)
The Price Elasticity of Supply (PES) is calculated as 0.16$. This indicates that the supply of Ecuador’s oil is relatively inelastic.
(b) Fundamental Economic Questions
The fundamental economic questions addressed are: What to produce? and How to produce?
(c) Opportunity Cost of Sunshine
Sunshine has no opportunity cost because it is a free and abundant resource. It is not scarce and does not
Read MoreSpain’s Economic Transformation: From Autarky to Autonomy
Economic Development: Regional Governments. The governments of the development era, starting with Franco’s government in 1957 and continuing through the 1960s, marked a significant shift in direction. This period transitioned from an early stage dominated by Falangist principles to one where technocrats held sway. These young economists and technicians, often linked to Opus Dei, were seen as key to economic growth and social stability. Their approach was more technical than ideological, focusing
Read MoreEconomics: Resource Markets, Price Controls, and Consumer Choice
Chapter 4: Resource and Product Markets
The Link Between Resource and Product Markets
- The markets for resources and products are closely linked.
- Changes in one will affect the other.
Economics of Price Controls
Price Ceilings
- A price ceiling is a legally established maximum price that sellers may charge.
- The direct effect of a price ceiling below the equilibrium price is a shortage: quantity demanded exceeds quantity supplied.
Secondary Effects of Price Ceilings
- Reduction in the quality of the good.
- Inefficient
Funding Options: Short-Term & Long-Term Business Finance
Short-Term Financing
Overdraft (Banking)
Extending an upper limit of credit tells you the current balance. The bank accepts the overdraft depending on the solvency of the company.
Credit Account Policy
The bank offers a company account and a term. As long as you do not incur charges, you do not pay interest.
Factoring
Several companies offer factoring services:
- Buyer investigation and risk classification management.
- Bill collection.
- Coverage of commercial risk.
- Invoice finance up to a maximum of 85%.
- Sales
Understanding Public Sector Economics and Fiscal Policy
The public sector includes the economic activities of a nation that fall within the governmental sphere.
Economic Policy
Economic policy: government intervention in the economic affairs of a country in order to achieve certain objectives.
Goals of Economic Policy
A goal of economic policy is any general aspiration that a society seeks to achieve.
Economic Policy Objectives
- Economic Growth: Increase of production without exhausting resources. It is measured by the average annual growth rate of GDP or GDP
U.S. Federal Tax Concepts: Q&A on Authority, Planning, Compensation, Retirement, and Property
Chapter 2: Tax Authority & Legislation
- Which of the following statements is incorrect? (Answer: C)
- a. Tax periodicals are secondary authorities.
- b. A particular court of appeals need not follow the decisions of another court of appeals.
- c. Revenue procedures have higher authority than temporary regulations. (Incorrect: Temporary regulations generally have higher authority.)
- d. A disadvantage of electing to use the small claims division of the Tax Court is that the court decision is final and cannot