Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.

Economics Concepts I - JRM

3.858 visualizaciones

Publicado el

Economics Concepts I - JRM

  • DOWNLOAD THIS BOOKS INTO AVAILABLE FORMAT (2019 Update) ......................................................................................................................... ......................................................................................................................... Download Full PDF EBOOK here { https://soo.gd/irt2 } ......................................................................................................................... Download Full EPUB Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download Full doc Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download PDF EBOOK here { https://soo.gd/irt2 } ......................................................................................................................... Download EPUB Ebook here { https://soo.gd/irt2 } ......................................................................................................................... Download doc Ebook here { https://soo.gd/irt2 } ......................................................................................................................... ......................................................................................................................... ................................................................................................................................... eBook is an electronic version of a traditional print book THIS can be read by using a personal computer or by using an eBook reader. (An eBook reader can be a software application for use on a computer such as Microsoft's free Reader application, or a book-sized computer THIS is used solely as a reading device such as Nuvomedia's Rocket eBook.) Users can purchase an eBook on diskette or CD, but the most popular method of getting an eBook is to purchase a downloadable file of the eBook (or other reading material) from a Web site (such as Barnes and Noble) to be read from the user's computer or reading device. Generally, an eBook can be downloaded in five minutes or less ......................................................................................................................... .............. Browse by Genre Available eBooks .............................................................................................................................. Art, Biography, Business, Chick Lit, Children's, Christian, Classics, Comics, Contemporary, Cookbooks, Manga, Memoir, Music, Mystery, Non Fiction, Paranormal, Philosophy, Poetry, Psychology, Religion, Romance, Science, Science Fiction, Self Help, Suspense, Spirituality, Sports, Thriller, Travel, Young Adult, Crime, Ebooks, Fantasy, Fiction, Graphic Novels, Historical Fiction, History, Horror, Humor And Comedy, ......................................................................................................................... ......................................................................................................................... .....BEST SELLER FOR EBOOK RECOMMEND............................................................. ......................................................................................................................... Blowout: Corrupted Democracy, Rogue State Russia, and the Richest, Most Destructive Industry on Earth,-- The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,-- Call Sign Chaos: Learning to Lead,-- StrengthsFinder 2.0,-- Stillness Is the Key,-- She Said: Breaking the Sexual Harassment Story THIS Helped Ignite a Movement,-- Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones,-- Everything Is Figureoutable,-- What It Takes: Lessons in the Pursuit of Excellence,-- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money THIS the Poor and Middle Class Do Not!,-- The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness,-- Shut Up and Listen!: Hard Business Truths THIS Will Help You Succeed, ......................................................................................................................... .........................................................................................................................
       Responder 
    ¿Estás seguro?    No
    Tu mensaje aparecerá aquí
  • Sé el primero en recomendar esto

Economics Concepts I - JRM

  1. 1. Economics Concepts: • Accounting Profit and Economic Profit • Marginalism • Absolute and Competitive advantage From: Jay R Modi 1
  2. 2. #1 Contrast the concepts of “accounting profit” and “economic profit.” Explain how a mis-reading of accounting profit can lead a firm to overestimate its profitability. Explain why an economic agent earning a positive level of economic profit would indicate that the agent is earning a superior return on its assets. In economics, a firm is said to be making a normal profit when total revenues equal total costs. Profit generally is the making of gain in business activity for the benefit of the owners of the business. The word comes from Latin meaning "to make progress", is defined in two different ways, one for economics and one for accounting. Accounting profit is defined as total revenue (sales) minus accounting (explicit) costs i.e. monetary payments (or cash expenditures) made to supply labor services, materials, fuel, transportation services, depreciation, interest and taxes. For example, if a company invest $50,000 to start a business and earned $60,000 in profit, than its accounting profit would be $10,000. Accounting profits tend to be higher than economic profits as they omit certain implicit costs, such as opportunity costs An Economic profit arises when the company’s revenue exceeds the total (opportunity) cost of its inputs. A positive economic profit indicates that book value is increasing which over time will yield a positive shareholder value. Misreading of accounting profit can lead a firm to overestimate its profitability because accounting profits doesn’t take into consideration a firm’s implicit costs such as opportunity costs i.e. the cost of an alternative that must be forgone in order to pursue a certain action. To § 2
  3. 3. the firm, implicit costs are those cost that are represented by lost opportunity in the use of a company's own resources, excluding cash. Economic agent earning a positive level of economic profit is an indication that agent is earning superior return on its assets because total cost i.e. both explicit and implicit costs covered by the total revenue. If a company covers only explicit costs than it can be said that the company is earning normal profit but if a company covers explicit cost along with the implicit cost than it can be said that it is making economic profit and earning a superior return on its assets. #2 Explain the concept of “Marginalism.” Explain how economists use marginalism as a decision-making paradigm. MARGINALISM is the decision-making of forward and not backward process. Each decision has a corresponding benefit (marginal benefit) and it has corresponding cost (marginal cost) The best way to understand the concept of Marginalism is by understanding it in terms of Marginal benefit and Marginal cost. Marginal benefit (MB) is the benefit a consumer or user gets after consuming the next unit of same activity or commodity. Marginal cost (MC) is the cost associated with the next unit of the same activity. Economists can use Marginalism as a decision-making paradigm in following two ways: If the marginal benefit exceeds the marginal cost than the activity should be undertaken. MB > MC--- Undertake the Activity § 2
  4. 4. If the marginal costs exceeds the marginal benefit than the activity should not be undertaken. MB > MC--- Undertake the Activity #3 Social Security is a program that has the effect of redistributing wealth from income earners to older Americans who for the most part have retired. Explain why such redistribution might not be seen by economist as an improvement in economic efficiency Economic efficiency can be defined as the degree to which the given amounts of inputs are used to produce the maximum output. In other words, economic efficiency in economics terms means, ‘‘efficient distribution’’ i.e. obtaining maximum output out of the least input. When a wealth is redistributed from income earners to old Americans who are retired and cannot add value to the economic system, it leads to economic in-efficiency. There are two reasons for the same: • Full utilization of resources by the society as by doing this, all the employed resources will be used by the society to provide the maximum possible satisfaction of redistributing the wealth, and • Expectation of decrease in the gap between income earners and old Americans, as in the future there will be equal number of income earners and old Americans. #4 Explain and contrast the concepts of absolute advantage and comparative advantage. Which of these concepts is the determining factor in the establishment of trade flows among countries? Explain Absolute Advantage means the ability of a country, individual, company or region to produce a good or service at a lower cost per unit than the § 2
  5. 5. cost at which any other entity produces that good or service. For example; Zambia, the country has an absolute advantage over many countries in the production of copper Comparative Advantage means the ability of a country, individual, company or region to produce a good or service at a lower opportunity cost than the cost at which any other entity produces that good or service. In establishment of a trade flows among two countries comparative advantage is the determining factor. It can be understood with the help of following example. 30 China Production possibility W H E 20 Japan E T 20 30 RICE If we look at the above example, we will find that China has absolute advantage in the production of wheat as it can produce wheat at less cost than Japan and Japan has the absolute advantage in the production of rice as it can produce rice at less cost than China. But if we consider the opportunity cost of China producing one more unit of wheat, half a unit of rice has been foregone. When Japan produces one more unit of wheat, two units of rice are foregone. Economics is concerned with the allocation of scarce resources. Fewer resources are foregone if China concentrates its resources in the production of maize § 2
  6. 6. and if Japan specializes in the production of rice. Therefore we can conclude that, China has a Comparative advantage in the production of Wheat, and Japan has a Comparative advantage in the production of Rice § 2

×