Economics Concepts: Demand, Surplus, Taxes, and Market Efficiency
Economics Concepts Explained
Demand and Elasticity
- Vertical Demand Curve: Price elasticity of demand equals zero.
- Perfectly Elastic Supply Curve: Horizontal.
Consumer and Producer Surplus
- Consumer Surplus: The difference between willingness to pay and the actual amount paid.
- Example 1: Priscilla is willing to pay $65, Patty $50; shoes cost $45. Total consumer surplus: $20 ($65-$45 + $50-$45).
- Example 2: Jung is willing to pay $85, Eddi $65; jacket costs $70. Total consumer surplus: $20 ($85-$70 + $65-$
Monopolies and Globalization: Impact on Markets
Monopolies
Around the world, large companies control most of the markets in different areas, producing and selling their goods and services. These industries do not have many competitors because they absorb them or merge, leading small and medium enterprises. This fact is more remarkable in developing countries than in the richest nations, although it happens all around the world. This kind of commerce has positive and negative aspects that will be discussed in the following paragraphs.
Firstly, most
Understanding Key Economic Concepts in Spain
What is a Tribute?
Is all income earned by a public agency against the taxpayer an indication of the economic capacity of the Principles of the Spanish tax system?
Principle of Generality
All those engaged in economic activity in the Spanish territory must pay taxes.
Principle of Junction
Those with greater economic capacity have to pay more taxes, with the limit of confiscation of property, a limit that is the ultimate expression of the right to private property.
What are the State’s General Budgets?
Read MoreInterwar Economy: Crisis, Recovery, and U.S. Prosperity
Introduction: The Interwar Economy
The period from 1919 to 1939 was marked by significant economic imbalances, culminating in the Great Depression. World War I ended the United Kingdom’s economic dominance, with the U.S. emerging as a major power.
In 1929, the New York Stock Market crashed, triggering a global crisis that affected the USA, Europe, and much of the world.
The Great Depression (1929-1939)
- Industry declined due to the collapse of production.
- Widespread unemployment and poverty.
Solutions:
Read MoreEconomic Turmoil: Post-WWI Era and the Great Depression
The World Economy: 1919-1924
Economic Implications of Post-WWI
- Heavy casualties and material losses
- Disarticulation of the economies of losing countries
- Trade war compensations
- Disorganization of the monetary system
Economic Policies After the War
- Lack of cooperation in the early post-war years and protectionist policies
- The Dawes Plan to improve the economy
Economic Growth in the U.S.
- Increased production and cheaper prices
- Economic stagnation in the United Kingdom
- Serious crisis and recovery in Germany by
Understanding Cost of Capital, Working Capital, and Funding Sources
Cost of Capital: An Introduction
Cost of capital is a cut-off rate for allocating capital to investment projects. It represents the rate of return a project must achieve to maintain the market price of the stock.
Importance of Cost of Capital
The cost of capital is crucial in financial management and plays a vital role in several areas:
- Capital Budgeting Decisions: Used for discounting cash flows under the Net Present Value (NPV) method for investment proposals.
- Capital Structure Decisions: Helps in