ECON 203 Lecture 4: Chapter_12 Open Economies

Need help revising, and recommendation for a conclusion.

Throughout this paper is my understanding of what I have learned in class chapters 1-4, expressing my understanding and opinions. Economics is the study of how we deal with scarce resources. Microeconomics specially deals with business in the home country exclusively. This type of economics affects small businesses in the home country only. On the other hand, macroeconomics concerns our national welfare concerning trade and international business.

I believe that many things affect our economy on a microeconomics level. Things such as our understanding of our country in reflection to the world are very important. That is why we study ourselves before we study the macroeconomic principle of the world. Understanding ourselves is what microeconomics teaches us. Working from the inside out. The world is a place where there are differences in our wants and what we get. That is what makes items scarce. That is what positive economics is. Positive economics deals with what is and what we have. The other type of economics is called normative statements. This deals with what we should receive instead of what is and deserved to some extent. It's our scarce resources that determine our allocation of resources and how we use our resources and time. This is where opportunity costs come in, giving up something to do something. A successful business or country never ignores opportunity costs. We must ensure that we have a comparative advantage instead of the absolute advantage. Our resources must be used to achieve maximum output. Comparative is met when we have fewer opportunity costs to make some certain products than the other person or entity.

My initial understanding was scarcity was oil potentially running out, but we have so much of it that you can always find more with techniques such as fracking. Now it's obvious to me, one of our most scarce resources is time. You cannot avoid the 8,760 hours in a year. I understand that people have unlimited wants but limited resources. Everything has a cost and we must make a choice as we don't have unlimited farms, factories workers, etc. scarcity forces choices and this ties in with opportunity cost, for every gun made, a theft from the hungry is made.€ The opportunity cost not being used to feed the poor, but to make guns. And I find it easy to understand no one can have everything choices must be made on benefits. If I'm going to school, imp giving up making cash, as I'm giving up money for an education, I value education more. Scarcity is also related to the invisible hand. As it's an achievement that leads free markets and capitalism through competition for scarce resources.

My understanding of the invisible hand is a person neither intends to promote public interest and does not know how much he is promoting it. Only intending on his own gain. Without being his intention a person can be lead by the invisible hand to do good for society by pursuing one's own self-interest. Going into equity and efficiency the invisible hand does ensure both equity and efficiency. People work in their selfish ways to maximize profit while also contributing to the economy as a whole. It can also be argued that as the invisible hand wants to ensure efficiency, it cannot guarantee efficiency, because it can fail to produce an efficient allocation of resources, which in turn lead to a market failure. It can also be argued that it can't guarantee equity because not everyone gets a fair price. The way I like to remember efficiency is with a real-life example, like a reduction in the number of workers needed to produce a particular good for a particular amount. Equity refers to the ownership interest in an asset, for example, if a person owns a house with a market value of $800,000 and owes $100,000 on the mortgage leaving a $700,000 equity in the home.

It can be predicted that if the price of beef increases - ceteris paribus-the quantity of beef demanded by buys will decrease. In other words, if the price of beef increases, then the quantity of beef increases, then the quantity of beef demanded will decrease because all things have to be equal. In-class lecture thought me all other things remaining the same.€ Economists use ceteris paribus to determine the effect of a factor when all other factors have been held the same and helps simplify the study and get a more refined data set.

Economists deal with many issues that pertain to assuring that both a countries domestic output is efficient and that there is an effective trade balance. This means that there are a balance and limit on the amount of imports. Also, this means home production must be able to meet export demands. There are many factors that affect the production of goods and their effect on shifting the production possibilities frontier. This involves evaluating every detail including knowing the products and any close substitutes and compliments. It also involves knowing how an action or other external force will affect demand. This is called price elasticity; Substitutes are products that can replace any given product or service. An example of this would be Coke and Pepsi. The presence of substitutes affects price elasticity because if there are other options, then any change to the price or quality of the product will cause a shift of the demand curve. O course, price is a huge reason why the demand for a product decreases or increases yet it doesn't shift the curve because of the price only. This price change will cause a domino effect that will end with the shifting of the demand curve because it will cause an increase or decrease in demand of the substitute good if the price change is either lower or higher respectively. This price change serves as a catalyst that will change people's desire to spend more money on a more expensive product and that will instead choose to buy the substitute good for cheaper or buy more of the desired product. The change in the price of actual products will not shift the demand curve yet the change of the price of substitutes will because it serves to change people's purchasing behavior. On the other hand, compliments serve to boost demand when there is a decrease in price. The use of complementary goods is dependent upon another product. An example of this would be hot dogs and buns. If the price of hotdogs decreases then, conversely, the demand for hot dog buns will increase because of this change in price. In this scenario, the decrease in price will cause a positive shift in the demand curve because of people's desire and willingness to buy more buns. This is an example of a demand shifter. There are a few other demand shifters. The shifters of the demand curve are changes in expectations, disposable income, price of substitute goods and complements, tastes and preferences, and population size and composition. Changes in income affect the demand curve because if income is lower then people tend to save any extra income instead of wasting it. Disposable income is minimized and spending is lower. This also causes people to see a perceived value of things and distinguishing between what is necessary and what is a relative luxury. The lower the income, the higher the saving and avoidance to spend. An example of this would be if someone needs to buy some medication and it is relatively expensive, that doesn't mean that someone won't buy the medication just because it is expensive. It is necessary. Other factors that contribute to spending and demand are having a price ceiling and price floor. Having a price ceiling is a limit on the price of the product this is a government-imposed idea that is meant to protect consumers from unfair pricing and other conditions that may be malicious or obscure. This affects demand because if there is a price ceiling there is a limit on profit on a unit-to-unit basis. The other factor is the price floor. This price floor was created to encourage competition and affect consumers' willingness to pay because sometimes this new price may be higher than the original price. This causes a negative impact on a product that has a less than wanted perceived value. Many factors contribute to economic prosperity and certainly do help assure that information is analyzed and implemented into an economic and business plan.

QUESTION 1

_____ refer to the forces of change whose direction and sometimes timing can be predicted.

2 points

QUESTION 2

Management institutes, certification agencies, and headhunting firms are examples of specialized intermediaries for:

2 points

QUESTION 3

_____ involves analyzing markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market.

2 points

QUESTION 4

Consumer safari refers to the initiatives taken by Unilever executives to spend a day with consumers in their homes to:

2 points

QUESTION 5

_____ refer to the forces of change whose direction and pace is largely unknown.

2 points

QUESTION 6

_____ are straight-line, one-factor projections from present to future.

2 points

QUESTION 7

The United States is separated from Nigeria by 5,840 miles and the Atlantic Ocean. According to the CAGE framework this is a case of:

2 points

QUESTION 8

The GDP of France is 2.113 trillion USD whereas Sierra Leone's GDP is approximately 4.812 billion USD. According to the CAGE framework, this is a case of:

2 points

QUESTION 9

_____ occurs when a function is taken out of one's country of residence to be performed in another country, generally at a lower cost.

2 points

QUESTION 10

Which of the following is true of acquisitions?

2 points

QUESTION 11

Which of the following statements holds true for the ISO 9001:2008 certification?

2 points

QUESTION 12

_____ refers to buying goods and services from foreign sources and bringing them back into the home country.

2 points

QUESTION 13

The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.

2 points

QUESTION 14

_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.

2 points

QUESTION 15

Which of the following can also function as collateral against loans?

2 points

QUESTION 16

_____ refers to the financing granted against collateral, which can be the imported/exported goods.

2 points

QUESTION 17

Which of the following is a contractual mode of entry into a foreign market?

2 points

QUESTION 18

_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.

2 points

QUESTION 19

Which of the following statements holds true for a nonentity joint venture?

2 points

QUESTION 20

The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.

2 points

QUESTION 21

_____ refers to the constellation of business, corporate, and international strategy elements, which managers must consider when making decisions.

2 points

QUESTION 22

Strategy implementation is the process of:

2 points

QUESTION 23

The _____ function requires monitoring performance so that it meets the performance standards established by the organization.

2 points

QUESTION 24

_____ refers to the sequence of activities that include the various steps of the supply chain as well as additional activities, such as marketing, sales, and service.

2 points

QUESTION 25

Outsourcing involves:

2 points

QUESTION 26

The U.S. fast-food chain Sonic will only open new outlets in states that are adjacent to states where it already has stores. This is an example of:

2 points

QUESTION 27

_____, which are a part of the SWOT analysis, assess the external attractive factors that represent the reason for a business to exist and prosper.

2 points

QUESTION 28

_____ refers to the number of different topographical markets in which an organization participates.

2 points

QUESTION 29

The first step in the planning process is:

2 points

QUESTION 30

In Holland, KFC makes a potato-and-onion croquette, while in France it sells pastries alongside chicken. KFC:

2 points

QUESTION 31

An automobile giant headquartered in the United States sells high-end bikes across the world. It wants to enter an emerging market. Customers in the market cannot afford the types of accessories used in the bikes. Thus the regional branch of the organization makes an autonomous decision to remove the accessories and to offer a toned-down version of the bikes to compete in the emerging market. This decision is accepted by the headquarters on the principle that the man on the ground is the best judge of local conditions. The above serves as an example of a(n):

2 points

QUESTION 32

Nike products are manufactured in factories in countries such as China, Vietnam, Indonesia, and Mexico. Wholesalers, retailers, agents, and brokers are intermediaries who help in bringing the products to the consumer. These intermediaries bring the products from the factories to the consumers. They serve as an example of:

2 points

QUESTION 33

Which of the following statements holds true for a global brand?

2 points

QUESTION 34

An organization that manufactures readymade cotton shirts sources the raw material from all over the world. It does this as a precaution against the failure of one or more companies to deliver the raw materials. The above serves as an example of:

2 points

QUESTION 35

Which of the following holds true for product adaptation?

2 points

QUESTION 36

In marketing, market segmentation refers to the:

2 points

QUESTION 37

In marketing, which of the following holds true for counterfeit markets?

2 points

QUESTION 38

_____ refers to buying raw materials, components, or services from one supplier exclusively, rather than buying from two or more suppliers.

2 points

QUESTION 39

_____ refers to a situation which means that there is no more stock of the company's product.

2 points

QUESTION 40

Which of the following statements holds true for the indirect channel of distribution?