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Why do Factors of Production matter? The foundation of most economic theories rests on opinions about the proper distribution of wealth among the holders of land, labor, capital, and in some cases, entrepreneurship. All the factors of production depend on each other for the creation of goods and services.
Using the full form of GNP (above), we can calculate Country ABC’s GNP as follows: GNP = C + I + G + X + Z. Where: Consumption = $100 million. Investments = $75 million. Government expenditure = $200 million. X [Net Exports (Value of exports - value of imports)] = -$25 million. Z [Net Income (Net income inflows from abroad - net income ...
The definition of marketing mix can best be described as the combination of elements used to promote products or services. These variable elements are based upon the analysis of the “four P’s” of marketing: product, price, place, and promotion. Specific marketing tactics are then formed from the intersection of these four factors.
Productivity is usually expressed as a ratio of output to inputs. It can be expressed as units of a product (e.g. cars) per worker-hour (total number of hours worked by all workers on that car). Given the cost of the worker-hour, productivity can also measure the efficiency of a company. These measures are quantitative and relatively easy to ...
Diseconomies of scale lead the marginal cost of a product to increase as a company grows. This is the opposite of economies of scale which cause the marginal cost for a product to decrease as a result of efficiencies achieved as a company grows and can spread its fixed costs over a larger quantity of products/services offered.
A command economy is a major feature of communist systems and the opposite of a capitalist society (where production and price levels are determined by market forces like supply and demand). In a command economy, the central government planning office determines production, distribution, and pricing. Capitalism encourages entrepreneurs to start ...
To calculate price elasticity of demand, you use the formula from above: The price elasticity of demand in this situation would be 0.5 or 0.5%. This means that for every 1% increase in price, there is a 0.5% decrease in demand. Since the change in demand is smaller than the change in price, we can conclude that demand is relatively inelastic.
Examples of Macroeconomic Factors. Common measures of macroeconomic factors include gross domestic product, the rate of employment, the phases of the business cycle, the rate of inflation, the money supply, the level of government debt, and the short-term and long-term effects of trends and changes in these measures.
APT is also very useful for building portfolios because it allows managers to test whether their portfolios are exposed to certain factors. APT may be more customizable than CAPM, but it is also more difficult to apply because determining which factors influence a stock or portfolio takes a considerable amount of research. It can be virtually ...
Elasticity of Supply = (% change in quantity supplied) / (% change in price) As demand for a good or product increases, the price will rise and the quantity supplied will increase in response. How fast it increases depends on the elasticity of supply. Let's look at an example. Assume when pizza prices rise 40%, the quantity of pizzas supplied ...