What was Milton Friedman's view of Profit and CSR?
-Businesses are not people; they don't have opinions.
-The moral obligation of a business is to make a return (profit) to its owners.
-Businesses must act within the confines of the law.
-Beyond that, it is not up to managers to make moral judgments on how to spend owners' money.
Draw a correctly-labelled exchange rate diagram for Pound Sterling
The total of all demands or expenditures in an economy at any given price level.
Will better pay improve productivity?
No. But higher productivity will improve worker pay because the worker is producing more for a given wage rate.
Why does the Average Fixed Cost (AFC) curve approach 0?
As output increases Fixed Cost is constant, divided by an ever-increasing number.
AFC will constantly decrease, approaching (but never reaching) 0.
What are possible arguments against Free Trade?
-Uncompetitive industries may lose jobs (unemployment)
-Strategic industries (e.g. energy) should be domestically provided.
Explain the problem with Negative Externalities.
Producers and consumers only consider their private costs and benefits. The negative externality creates a social cost, so too much of the good is produced/consumed.
What is the formula for Terms of Trade?
Terms of Trade =
Index of Import Prices / Index of Import Prices X 100
What is the formula for YED?
Percentage Change Qd / Percentage Change Income
What are the assumptions of Comparative Advantage theory?
-There are no transport costs.
-Costs are constant and there are no economies of scale.
-There are only two economies, producing homogeneous goods.
-Factors of production are completely mobile.
-There are no tariffs or trade barriers.
-There is perfect knowledge between all agents.
