Economics

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Economics is the social science that analyzes the production, distribution, and consumption of goods and services. ”

~ Wikipedia on economics


Business economics is a field in applied economics which uses economic theory and quantitative methods to analyze business enterprises and the factors contributing to the diversity of organizational structures and the relationships of firms with labour, capital and product markets.”

~ Wikipedia on business economics


Taloustiede on yhteiskuntatiede, joka tutkii lähinnä taloudellisia päätöksiä tekevien toimijoiden kannustimia ja käyttäytymistä, sekä niiden perusoletuksista johdettuilla malleilla ja teorioilla erilaisia taloudellisia ilmiöitä. Tavallisia tutkimuksen kohteita ovat hyödykkeiden kulutus, tuotanto ja allokointi, markkinoiden toiminta sekä aina kokonaistalouteen liittyvät kysymykset kuten talouskasvu ja inflaatio. Suomeksi taloustiedettä sanotaan myös kansantaloustieteeksi erotuksena liiketaloustieteestä. ”

~ Suomenkielinen Wikipedia on taloustiede


w:Outline of economics is a good introductory text to economics if you don't know what it comprises and what kind of issues it deals with.


Year 1

Business Economics

w:Economics is divided to the study of w:microeconomics an w:macroeconomics with various sub-fields.

w:Microeconomics ( w:fi:Mikrotaloustiede ) (from Greek prefix micro- "μικρό" meaning "small" + "economics"- "οικονομια") is a branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources. ( Wikipedia )
w:Macroeconmics ( w:fi:Makrotaloustiede ) (from Greek prefix "makros-" meaning "large" + "economics") is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. ( Wikipedia )

Week 43

The w:demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. ( Wikipedia ).
  • The w:law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (w:ceteris paribus). ( Wikipedia )
  • w:Normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive w:income elasticity of demand. ( Wikipedia ) vs. an w:inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. ( Wikipedia )

Week 44

w:Economies of scale In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. w:Diseconomies of scale are the forces that cause larger firms and governments to produce goods and services at increased per-unit costs. The concept is the opposite of economies of scale. ( Wikipedia )

In economics, w:returns to scale ( w:fi:Skaalaetu ) and economies of scale are related terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable (chosen by the firm).

w:Utility ( w:fi:Hyöty ) to w:consumer is a representation of preferences over some set of goods and services. ( Wikipedia )

w:Marginal utility ( w:fi:Rajahyöty ) - In economics, the marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. ( Wikipedia )

w:Elasticity (economics) ( w:fi:Jousto ) is the measurement of how changing one economic variable affects others. ( Wikipedia )

w:Price elasticity of demand ( w:fi:Kysynnän hintajousto ) (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. ( Wikipedia )
w:Price elasticity of supply (PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price. ( Wikipedia )
w:Income elasticity of demand ( w:fi:Kysynnän tulojousto ) measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus.
w:Cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. ( Wikipedia )
There are more elasticies in the w:Elasticity (economics)

Week 45

w:Total cost == w:fixed cost + w:variable costs

A w:production function ( w:fi:Tuotantofunktio ) is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. ( Wikipedia )

w:Marginal product of labor also known as MPL is the change in output that results from employing an added unit of labor.( Wikipedia )

w:Marginal cost ( w:fi:Rajakustannus ) is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good. ( Wikipedia )

w:Average cost or unit cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variable costs (total variable costs divided by Q) plus average fixed costs (total fixed costs divided by Q). ( Wikipedia )

w:Market structure is the number of firms producing identical products which are homogeneous. The types of market structures include the following:

All definitions of market structure from Wikipedia article w:market structure

The w:Herfindahl index ( w:fi:Herfindahlin indeksi ) (also known as Herfindahl–Hirschman Index, or HHI) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. ( Wikipedia )

w:Game theory ( w:fi:Peliteoria ) is a study of strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."

Week 46

w:Macroeconomics

w:Gross domestic product (GDP) ( w:fi:Bruttokansantuote ) is the market value of all officially recognized final goods and services produced within a country in a given period of time. ( Wikipedia )

w:Circular flow of income or circular flow refer to a simple economic model which describes the reciprocal circulation of income between producers and consumers. ( Wikipedia ) which is used to calculate the GDP.
Consumer expendiatures are divided to the w:services, w:durable goods and w:consumables ( a.k.a. non-durables )
w:Unemployment ( w:fi:Työttömyys )
w:Frictional unemployment
w:Structural unemployment
Cyclical unemployment
w:Business cycle (or economic cycle) ( w:fi:Suhdannevaihtelu ) refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (an expansion or boom), and periods of relative stagnation or decline (a contraction or recession). ( Wikipedia )
w:Consumer price index (CPI) ( w:fi:Kuluttajahintaindeksi ) measures changes in the price level of consumer goods and services purchased by households. ( Wikipedia )

Week 47

  • w:Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. ( Wikipedia )

Notes

Chapter 3

Chapter 6

  • A w:budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. ( Wikipedia )
  • A w:Giffen good ( w:fi:Investointi ) is one which people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Giffen good situation, the income effect dominates, leading people to buy more of the good, even as its price rises. ( Wikipedia )
  • In economics and business, a w:network effect ( w:fi:Verkostovaikutus ) (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people.
  • w:Path dependence ( w:fi:Polkuriippuvuus ) explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant. ( Wikipedia )
  • w:Sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered. ( Wikipedia )

Chapter 10

w:Allocative efficiency ( w:fi:Allokointitehokkuus ) is a type of economic efficiency in which economy/producers produce only those types of goods and services that are more desirable in the society and also in high demand.( Wikipedia )

Chapter 13

w:Potential output (also referred to as "natural gross domestic product" or "Potential GDP")) refers to the highest level of real Gross Domestic Product output that can be sustained over the long term. ( Wikipedia + term Potential GDP as per book )

Chapter 16

  • w:Procyclical is a term used in economics to describe how an economic quantity is related to economic fluctuations. It is the opposite of countercyclical. However, it has more than one meaning. ( Wikipedia )
  • w:Monetarism ( w:fi:Monetaristinen taloustiede ) is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over longer periods and that objectives of monetary policy are best met by targeting the growth rate of the money supply. ( Wikipedia )
  • w:Taylor rule is a monetary-policy rul

More information


Year 2

Global Business Environment

International Economics

Week 35 - Trade overview

  • Business cycles (or economic cycles) refer to economy-wide fluctuations in production, trade and economic activity in general over several months or years in an economy organized on free-enterprise principles. ( Wikipedia )


Week 36 - Classical trade theories

  • Factors of production are the inputs to the production process. Finished goods are the output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function. There are three basic (AKA classical) factors of production: land, labor, capital

    ~ Wikipedia on factors of production


  • Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP per capita is often considered an indicator of a country's standard of living ( Wikipedia )
  • Terms of trade (TOT) refers to the relative price of exports in terms of imports. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods. ( Wikipedia )
  • Devaluation in modern monetary policy is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged. ( Wikipedia )

Week 37 - Modern trade theories, trade policy

Week 38 - No class, work on report

Week 39 - International finance overview

Week 40 - Exchange rate determination

Week 41 - Exchange rate risk

Week 42 - Presentation

Home exam

  1. ) Explain why neighboring countries tend to trade extensively with each other.
  2. ) Compare Ricardo’s comparative advantage theory and Heckscher-Ohlin endowment model as explanations for international trade.
  3. ) Vernon’s product lifecycle theory explaining exports.
  4. ) External economies of scale explaining intraindustry trade.
  5. ) What are the welfare effects of w:tariffs?
  6. ) What are various forms of trade barriers?
  7. ) Arguments for protection(ism).
  8. ) Compare predatory dumping and international price discrimination.
  9. ) Preferential trade arrangements.
  10. ) Why there is foreign exchange risk?
  11. ) How is private saving related to the current account?
  12. ) Compare spot rates, forward rates and swaps.
  13. ) Explain how a call (foreign-currency) option is useful in international trade.
  14. ) Explain how a put (foreign-currency) option is useful in international trade.
  15. ) Purchasing power parity and interest parity explaining exchange forward exchange rates.
  16. ) What are the three concepts of exchange rate exposure?
  17. ) What are the causes of currency crises?
  18. ) What is the Marshall-Lerner condition?
  19. ) Different approaches to the balance of payments.
  20. ) The monetary approach explaining exchange rates.

Finance


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