Temario Eco-Empre

ENTREPRENEURSHIP AND ECONOMICS
4th ESO - 2017-2018
UNIT 1: Food and beverage businesses
The contents for this unit are:

During thisSWOT analysis
first unit we are going to learn about food and beverage companies. It is said that
 Franchising
people know them because modelthey usually spend more than 30% of their salary in that market.
 Marketing mix: price, promotion, product and placement (4P's)
 Ethics
ACTIVITY: andofCorporate
First all, makeSocial
a listResponsibility
with the name(CSR)
of different companies for each
category:
Fast food
companies
Sparkling
beverages
National food
companies
Foreign food
companies
Food companies (and others) use different strategies in order to analyse if a company is running
in a right way. For that reason, it is important to describe the positive and negative
characteristics in a business with the aim of improving it and getting a competitive advantage.
One of the most known analysis is SWOT. This analysis is an acronym for strengths,
weaknesses, opportunities, and threats and is a structured planning method that evaluates
those four elements of an organization, project or business venture.
Strengths: characteristics of the

business or project that give it an
advantage over others
Weaknesses: characteristics of the

business that place the business or project
at a disadvantage relative to others
Opportunities: elements in the

environment that the business or project
could exploit to its advantage
Threats: elements in the environment

that could cause trouble for the business
or project
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And here you have one of the most common business case, McDonald's and its SWOT analysis.
Do you have any advice for this brand? Discuss with your partner different
possibilities to improve its strategy, its distribution, its marketing, its
product, etc.
Be creative! After your brainstorming, it will be done a general debate in
class!
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ACTIVITY: BUSINESS CASE
Burger King
The BURGER KING® system
operates more than 12,000
restaurants in all 50 states and in 73
countries and U.S. territories
worldwide. Approximately 90 percent
of BURGER KING® restaurants are
owned and operated by
independent franchisees, many of
them family- owned operations that
have been in business for decades.
In 2008, Fortune magazine ranked
Burger King Corp. (BKC) among
America's 1,000 largest
corporations and in 2010, Standard
& Poor's included
shares of Burger King Holdings, Inc. to the S&P MidCap 400 index. BKC was
recently recognized by Interbrand on its top 100 “Best Global Brands” list and Ad
Week has named it one of the top three industry-changing advertisers within the last
three decades.
McDonalds
McDonald's is the leading global foodservice retailer with more than 32,000 local
restaurants serving more than 60 million people in 117 countries each day. More
than 75% of McDonald's restaurants worldwide are owned and operated by
independent local men and women.
We serve the world some of its favorite foods - World Famous Fries, Big Mac,
Quarter Pounder, Chicken McNuggets and Egg McMuffin.
Our rich history began with our founder, Ray Kroc. The strong foundation that he
built continues today with McDonald's vision and the commitment of our talented
executives to keep the shine on McDonald's Arches for years to come.
QUESTIONS
 In the early 1990's Burger King Restaurants profits steadily declined as McDonald's
and Wendy's gained market share. Each year there were more stores closing than
opening. Is this loss of market share a Strength, Weakness, Opportunity or Threat for
Burger King?
 Eating habits of customers are changing, with research showing that most customers
order food to go. Burger King can reduce the cost of building a new restaurant from
$1.3 million to $970,000 if they make their stores smaller. Is finding out this
information a Strength, Weakness, Opportunity or Threat for Burger King?
 In 2004 Greg Brenneman was hired to lead Burger King as CEO. Brenneman
previously helped turn around PWC consulting and helped facilitate that company's
merger with IBM Global Services. This merger earned the title of 'deal of the year'
from Institutional Investor Magazine. Prior to that, Brenneman spent six years at the
helm of Continental Airlines, helping to return the company to profitability after 16
years of losses. Brenneman also has an MBA
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from Harvard Business School. Is having Brenneman as CEO a Strength, Weakness,
Opportunity or Threat for Burger King?
 Burger King spent $340 million on an ad campaign that targets teenage males at the
expense of other market segments, especially women. Franchisees are unhappy as they
felt this advertising was too focused on a narrow segment. Is this franchisee reaction
a Strength, Weakness, Opportunity or Threat for Burger King?
 Brenneman determined that there will always be at least 30 project ideas in the works. Is
having many new project ideas in development a Strength, Weakness, Opportunity or
Threat for Burger King?
 In 1999 McDonalds launched a cross promotion with Beanie Babies (a small stuffed
animal toy) at the height of the popularity of the Beanie Baby craze. Is this cross
promotion a Strength, Weakness, Opportunity or Threat for McDonalds?
 A trend towards high quality coffee consumption and popularity of coffee shops
emerged. Is this trend towards high quality coffee a Strength, Weakness, Opportunity
or Threat for McDonalds?
 McDonalds trains its franchisees and others at its own Hamburger University.
Hamburger University is on an 80 acre (320,000 m^2) campus with 19 full-time
international resident instructors to teach students from more than 119 countries. The
state-of-the-art facility includes 13 teaching rooms, a 300 seat auditorium, 12
interactive education team rooms, and 3 kitchen labs. Hamburger University
translators can provide simultaneous translation, and the faculty has the ability to
teach in 28 different languages. Is Hamburger University a Strength, Weakness,
Opportunity or Threat for McDonalds?
 Morgan Spurlock's 2004 documentary film Super Size Me said that McDonald's food
was contributing to the epidemic of obesity in society, and that the company was
failing to provide nutritional information about its food for its customers. Is this
publicity a Strength, Weakness, Opportunity or Threat for McDonalds?
 In May 2003 a cow with Bovine spongiform encephalopathy, more commonly

known as Mad Cow Disease was discovered in Alberta, Canada. Is publicity about
Mad Cow Disease in North America a Strength, Weakness, Opportunity or Threat for
McDonalds?
 McDonalds in 2010 announces that it will introduce free Wi-Fi Internet access in
over 11,000 restaurants. Is this introduction of free Wi-Fi a Strength, Weakness,
Opportunity or Threat for McDonalds?
ACTIVITY: BUSINESS CASE: COCACOLA
Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr.
John
S. Pemberton, led him to create a distinctive tasting soft drink that could be sold
at soda fountains. He created a flavored syrup, took it to his neighborhood pharmacy,
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sampled it. Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited
with naming the beverage “Coca-Cola” as well as designing the trademarked, distinct
script, still used today.
Did you know? The first servings of Coca-Cola were sold for 5 cents per glass. During
the first year, sales averaged a modest nine servings per day in Atlanta. Today, daily
servings of Coca-Cola beverages are estimated at 1.9 billion globally.
Prior to his death in 1888, just two years after creating what was to become the world’s
#1-selling sparkling beverage, Dr. Pemberton sold portions of his business to various
parties, with the majority of the interest sold to Atlanta businessman, Asa G.
Candler. Under Mr. Candler’s leadership, distribution of Coca-Cola expanded to soda
fountains beyond Atlanta. In 1894, impressed by the growing demand for Coca-Cola
and the desire to make the beverage portable, Joseph Biedenharn installed bottling
machinery in the rear of his Mississippi soda fountain, becoming the first to put
Coca-Cola in bottles. Large scale bottling was made possible just five years later,
when in 1899, three enterprising businessmen in Chattanooga, Tennessee secured
exclusive rights to bottle and sell Coca-Cola. The three entrepreneurs purchased the
bottling rights from Asa Candler for just $1. Benjamin Thomas, Joseph Whitehead
and John Lupton developed what became the Coca-Cola worldwide bottling system.
Among the biggest challenges for early bottlers, were imitations of the beverage by
competitors coupled with a lack of packaging consistency among the 1,000 bottling
plants at the time. The bottlers agreed that a distinctive beverage needed a standard
and distinctive bottle, and in 1916, the bottlers approved the unique contour bottle.
The new Coca-Cola bottle was so distinctive it could be recognized in the dark and it
effectively set the brand apart from competition. The contoured Coca-Cola bottle was
trademarked in 1977. Over the years, the Coca-Cola bottle has been inspiration for
artists across the globe — a sampling of which can be viewed at World of Coca-Cola
in Atlanta.
The first marketing efforts in Coca-Cola history were executed through coupons
promoting free samples of the beverage. Considered an innovative tactic back in 1887,
couponing was followed by newspaper advertising and the distribution of promotional
items bearing the Coca-Cola script to participating pharmacies.
Fast forward to the 1970s when Coca-Cola’s advertising started to reflect a brand
connected with fun, friends and good times. Many fondly remember the 1971 Hilltop
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Singers performing “I’d Like to Buy the World a Coke”, or the 1979 “Have a Coke and
a Smile” commercial featuring a young fan giving Pittsburgh Steeler, “Mean Joe
Greene”, a refreshing bottle of Coca-Cola. You can enjoy these and many more
advertising campaigns from around the world in the Perfect Pauses Theater at World
of Coca-Cola.
EVOLUTION OF THE COCA-COLA BOTTLE

The 1980s featured such memorable slogans as “Coke is It!”, “Catch the Wave” and
“Can’t Beat the Feeling”. In 1993, Coca-Cola experimented with computer animation,
and the popular “Always Coca-Cola” campaign was launched in a series of ads
featuring animated polar bears. Each animated ad in the “Always Coca-Cola” series
took 12 weeks to produce from beginning to end. The bears were, and still are, a huge
hit with consumers because of their embodiment of characteristics like innocence,
mischief and fun. A favorite feature at World of Coca-Cola is the ability to have your
photo taken with the beloved 7′ tall Coca-Cola Polar Bear.
Did you know? One of the most famous advertising slogans in Coca-Cola history “The
Pause That Refreshes” first appeared in the Saturday Evening Post in 1929.
The theme of pausing with Coca-Cola refreshment is still echoed in today’s marketing.
In 2009, the “Open Happiness” campaign was unveiled globally. The central message
of “Open Happiness” is an invitation to billions around the world to pause, refresh with
a Coca-Cola, and continue to enjoy one of life’s simple pleasures. The “Open
Happiness” message was seen in stores, on billboards, in TV spots and printed
advertising along with digital and music components — including a single featuring
Janelle Monae covering the 1980 song, “Are You Getting Enough Happiness?”
The happiness theme continued with “Open the Games. Open Happiness” featured
during the 2010 Winter Olympic Games in Vancouver, followed by a 2010 social
media extension, “Expedition 206” — an initiative whereby three happiness
ambassadors travel to 206 countries in 365 days with one mission: determining what
makes people happy. The inspirational year-long journey is being recorded and
communicated via blog posts, tweets, videos and pictures.
Experts have long believed in the connection between happiness and wellness, and
Coca-Cola is proud to have played a part in happy occasions around the globe. In
Atlanta, check out the Coca-Cola Theater at World of Coca-Cola and see the magic
that goes into every bottle of Coca-Cola. Interested in learning even more about
Coca-Cola history? Go to www.coca-colacompany.com and check out
the History section.
QUESTIONS
1. Complete the following sentences with a correct answer
 Cocacola produces beverages since...

 Its founder was ...
 Originally invented as a...
 The formula contains a secret due to...
2.Explain why the brand is related to Christmas.
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3.Prepare a SWOT analysis about Cocacola and compare it with another sparkling beverages Company
S W
O T
Most of the food businesses are organised in franchises. Franchising is simply a method for
expanding a business and distributing goods and services through a licensing relationship. In
franchising, franchisors (a person or company that grants the license to a third party for the
conducting of a business under their marks) not only specify the products and services that will
be offered by the franchisees (a person or company who is granted the license to do business
under the trademark and trade name by the franchisor), but also provide them with an operating
system, brand and support.
ACTIVITY: Prepare a list with the main characteristics of franchising as a distribution

method. Work individually, then in pairs and finally, in groups of four. Write down five
examples, at least.
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At home, google them and make a mind map about FRANCHISING. The following words
must be included: royalty, franchisor, franchisee, contract, barrier against entry, franchise
conditions, common distributors and marketing.
FRANCHISES
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Trying to analyse a brand in a complete way, it exists a marketing analysis too (the 4P's
analysis of Michael Porter). It consists in the description of different components: product,
price, promotion and placement.
Product
First, – The first
watch this of the Four Ps of marketing
documentary and is product. Athe
complete productfollowing
can be either a
table:
tangible good or an intangible service
https://www.youtube.com/watch?v=MYbbxdQmAuE that fulfills a need or want of consumers. Whether
you sell custom pallets and wood products or provide luxury accommodations, it’s
imperative
How that
about its you have a clear grasp of exactly
products? Howwhat your
is the product
price is and what makes it
determined?
unique before you can successfully market it.
Price – Once a concrete understanding of the product offering is established we can start
making some pricing decisions. Price determinations will impact profit margins, supply,
demand and marketing strategy. Similar (in concept) products and brands may need to be
positioned differently based on varying price points, while price elasticity considerations
may influence our next two Ps.
Promotion – We’ve got a product and a price now it’s time to promote it. Promotion
looks at the many ways marketing agencies disseminate relevant product information to
consumers and differentiate a particular product or service. Promotion includes elements
like: advertising, public relations, social media marketing, email marketing, search engine
marketing, video marketing and more. Each touch point must be supported by a well
positioned brand to truly maximize return on investment.
Place – Often you will hear marketers saying that marketing is about putting the right
product, at the right price, at the right place, at the right time. It’s critical then, to evaluate
what the ideal locations are to convert potential clients into actual clients. Today, even in
situations where the actual transaction doesn’t happen on the web, the initial place potential
clients are engaged and converted is online.
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What is the distribution method of How do they promote their business?
Mc.Donald's?
Finally, McDonald's has established an ethic code and they have founded Ronald's McDonald's
institute and The Hamburger University. These measures are taken with a social purpose. These
social actions between stakeholders are known as Corporative Social Responsibility
(CSR).
ACTIVITY: Could you find any information about these institutions? What did they
found them for?
Write different social activities organised by the school where we are. Do you have any
extra idea for the school?
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Nestea is a product which is made by Cocacola and Nestlé. That collaboration between brands
is known as Joint-Venture. Google this concept and search other examples of this type of
alliance. Make a list with "pros and cons" too.
JOINT VENTURE
For Against
In groups, prepare a portfolio and a presentation about a food or beverages company following
these contents:
General description: History, founders, general overview, etc. SWOT

analysis
4P's analysis
CSR actions
Does it apply the franchising model?
Recommendations (give tips/advice trying to improve the company) Conclusion
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UNIT 2: Manufacturing cars

2.1. First steps in cars manufacture
 Production models (taylorism, JIT, modern methods)
 Leadership and organisation
A hundred of years ago, factories produced cars with a particular production method. They
 Human resource: Recruitment
made their cars with sequenced steps and an strict monitoring task. Henry Ford was one of the
 Promotion
most famous strategies:
theorists. branding
Frederick Taylor had a similar theory about production. Watch the
following videos and write down the main characteristics about the scientific method of
production.
Taylorism: https://www.youtube.com/watch?v=4N2tnP1sYpY
Fordism: https://www.youtube.com/watch?v=lpTecAeYvGU
ANSWER:
Nowadays, car's manufacture has changed and factories apply Just-in-Time (JIT). "Just-in-Time"
means making "only what is needed, when it is needed, and in the amount needed." For example,
to efficiently produce a large number of automobiles, which can consist of around 30,000 parts,
it is necessary to create a detailed production plan that includes parts procurement. Supplying
"what is needed, when it is needed, and in the amount needed" according to this production
plan can eliminate waste, inconsistencies, and unreasonable requirements, resulting in improved
productivity.
JIT was invented by Toyota, one of the most famous automobile brand in Japan.
Look for JIT's origin and explain its creation with your own words.
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2.2. Companies evolution: leadership and conditions
Modern times film shows the typical company in the 1920's. Companies are very different right now.
Try to compare Modern Times factory with Google Company. First of all, watch the following
video and complete the table provided below:
VIDEO: https://www.youtube.com/watch?v=dQO3xK9g_CE
Modern Times Google Company
Tasks
Leadership
style
Labour
conditions
Creativity
Would you like to work for Google Company? Why?
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2.3. Recruiting employees
Modern companies select their employees using a wide range of selection

procedures. As you know, Internet has become one of the most effective ways to look
for a new job.
Building a professional brand is necessary in this competitive job market. Job seekers
need to have a professional online presence that can easily be found by hiring managers,
recruiters, and career contacts.
VideoCV :A video cv is a short video created by a candidate for employment and

uploaded to the Internet.
LinkedIn - Create a LinkedIn profile and start connecting. Ask and answer LinkedIn
questions to increase your visibility. www.likedin.com
VisualCV - Create a VisualCV to share with contacts and prospective employers.
www.visualcv.com
Write a Blog - Nowadays most people have a blog. However, a well-written blog
focused on your area of expertise is another good addition to your professional branding
package.
Create a Presence - Comment on other people's blogs, write some articles, go to
industry meetings, conventions, and events, and make contacts in your field. Be sure
that all your endeavours are focused and relevant to both your skills and your career
goals.
Build a Web Site - Consider a web site to create and showcase your brand. Many web
hosting services have built in web building tools and it's quick and easy to build a site
that reflects your professional presence.
ACTIVITY: Now try to answer these questions:

 Did you ever think of social media as a way to professional success?
 Are you really aware of the importance of taking care about the contents you
publish online?
 Can you think of any example that illustrates the inconvenience of saying thinks no
politically correct on your twitter account or your facebook profile?
ACTIVITY: Discussion. How do you see your future profession? Please answer the
following questions:
What kind of work are you interested in:

1. well paid work
2. interesting work
3. work in a large and famous company
4. quiet work
5. work in an industry which has future prospects
6. prestigious work
7. a kind of work such as not to sit the whole day in the office
8. to travel a lot
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ACTIVITY: How would you generally feel happy or unhappy, if you were in the following
situations. Use the words in italics to help you decide:
The company you work for is well-known for its job security.
You were suddenly made redundant.
You received a promotion. You
were given an increment. You
worked unsociable hours. You
had a steady job.
You had adverse working conditions.
You suddenly found yourself unemployed.
You took time off work because of repetitive strain injury. The
office where you work has sick building syndrome. You
receive regular perks as part of your job.
Somebody called you a workaholic.
Your company doesn’t give you many incentives.
Your work didn’t offer much job satisfaction.
Your company has a generous incentive scheme.
You receive a commission for the work you have done. You
receive support from a union.
You were under stress.
You were forced to resign.
You received a cut in your salary.
You found your job very demanding.
ACTIVITY: Role play: one or two of you must be the interviewers and the other the
interviewed, each of you have to prepare the questions and the answers. After rehearsing you
must perform in front of the whole class and the rest of the students must decide if the
candidate is suitable or not, and also if the interviewer’s questions are suitable or not.
Prepare a short interview in pairs. You must suppose you are a car brand and a candidate for
sales department.
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2.4. Branding
A brand represents the holistic sum of all information about a product or group of products. This
symbolic construct typically consists of a name, identifying mark, logo, visual images or
symbols, or mental concepts which distinguishes the product or service. A brand often carries
connotations of a product's "promise", the product or service’s point of difference among its
competitors which makes it special and unique. Marketers attempt through a brand to give a
product a "personality" or an "image". Thus, they hope to "brand", or burn, the image into the
consumer's mind; that is, associate the image with the product's quality. Because of this, a brand
can form an important element of an advertising theme: it serves as a quick way to show and tell
consumers what a supplier has offered to the market.
Well known products acquire brand recognition. A brand name comprises that part of a brand
consisting of words or letters that humans can verbalize. A brand name that has acquired legal
protection becomes a trademark.
The most effective logos should be recognizable instantly, and should evoke some sort of
emotional response. Well designed logos work well at many sizes, and even in one color.
Some well-known examples are: Apple computer's apple with a bite out of it started out as a
rainbow of color, and has been reduced to a single color without any loss of recognition. Coca
Cola's script is known the world over, but is best associated with the color red; its main
competitor, Pepsi has taken the color blue, although they have abandoned their script logo.
IBM, also known as "Big Blue" has simplified their logo over the years, and their name. What
started as International Business Machines is now just "IBM" and the color blue has been a
signature in their unifying campaign as they have moved to become an IT services company.
There are some other logos that must be mentioned when evaluating what the mark means to the
consumer. Automotive brands can be summed up simply with their corporate logo- from the
Chevrolet "Bow Tie" mark to the circle marks of VW, Mercedes and BMW, to the interlocking
"RR" of Rolls-Royce each has stood for a brand and clearly differentiated the product line.
While large corporations spend hundreds of thousands of dollars to update and implement their
logos, many small businesses will turn to local graphic designers to do a corporate logo.
ACTIVITY: Watch the video and write down the main characteristics of branding
https://www.youtube.com/watch?v=sQLlPC_alT8
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ACTIVITY: Watch the following advertisements and compare them using the space
provided.
Audi: https://www.youtube.com/watch?v=4j4xJGZRo0c
Seat: https://www.youtube.com/watch?v=PQDSjxrFXjk
Audi Seat
Slogan
Target
Music and atrezzo
Economic status
Message
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UNIT 3: Steve Jobs and Apple

 Entrepreneurship
1.Entrepreneurs
 Motivation
 Companyisprofile
An entrepreneur the person who creates a new business in the face of risk and uncertainty
 Benchmarkting
for achieving profit and and SWOT
growth analysis
opportunities and assembles the necessary resources to
 on
capitalize Legal protection
those opportunities.
Psychologists pointed that high achievers/entrepreneurs posses these traits:

1. Desire for responsibility
2. Preference for moderate risk
3. Confidence in their ability to succeed
4. Desire for immediate feedback
5. High level of energy
6. Skill in organization
7. Value of achievement over money
Other characteristics of entrepreneurs include:

1. High degree of commitment
2. Willingness to accept risk, work hard and take action
3. Flexibility
ACTIVITY 1: Identify 5 enterpreneurs and explain something about their ideas.
ACTIVITY 2: Now describe yourself using the answers listed above (write at least ten sentences)
EXAMPLES:
I am/I am not a risk taker.
My response to uncertainty is excitement/concern.
I like/I don’t like changes, they are a challenge.
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· I can work pretty hard/ I don’t like hard work/ Only when I am highly motivated I can work
hard.
· I am/I am not realistic/practical/efficient.
· I am very well organised/ have difficulties being organised.
· I never/sometimes/always plan ahead.
· I am/I am not able to network.
· I am more literate/numerate than numerate/literate.
· I know how to attract and retain customers/ I have difficulties dealing with customers.
· My level of commitment is high/low/medium.
· I am/I am not self motivated.
·
ACTIVITY 3 :Entrepreneur Self-Test, from
http://www.youronestopcenter.com/entrepreneur-test.php
ACTIVITY 4: One of the most famous entrepreneurs is Steve Jobs. Watch his talk at Standford
University and write down the key ideas
https://www.youtube.com/watch?v=UF8uR6Z6KLc
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2. Apple
Apple is one of the leading companies that is renowned for its unique products and brand. A
short talk with an Apple user reveals there is an emotional relation between consumers and
Apple products, including every “i” product created in the past two decades.
Why are Apple products different from their competitors’ products? How does Apple manage to
achieve innovation in its product families? Answering these questions provides interesting
insight into Apple’s history and how it survived its most critical time between 1985 and 1997.
When Steve Jobs returned to Apple after being fired, the company share was only worth US $5
and its future was uncertain. Today, in 2016, Apple’s share price is around US
$108 and the company achieved revenues of US $233.7 billion in 2015 with net income of US
$53.39 billion.
The Hard Times at Apple

The early days of Apple (which was cofounded by Steve Jobs on 1976) are characterized by its first
personal computer that was delivered with Apple OS. During this time, Apple was dominating
the market because there were no other manufacturers of this type of computer as computers
were used only by governments or large companies. However, in 1985, Steve Jobs was forced
to leave the company. This marked the start of a chaotic era in the company’s strategy and
product development.
In the period 1985-1997, Apple struggled to achieve market success, especially after Jobs’s
departure and increasing competition from other giants such as IBM, which decided to enter the
PC computers market. During this period, Apple faced number of challenges including:
 Unstable strategy due to the change of executive teams
 Unclear vision about Apple’s competitive strategy, especially after IBM entered the
PC market
 Unclear vision about selling OS licenses, which would put the company in
competition with Windows operating system
 Large number of failed products (such as Newton PDA) and few successful ones (such
as PowerBook)
 Products not unique in the market
 Confusion and uncertainty among Apple consumers, resulting from this strategy
Think Different!
After Steve Jobs returned to Apple in 1997 (upon Apple’s acquisition NeXT), he started to
apply the design thinking characteristics discussed above, which reflected his vision for Apple
products. The vision discussed below was used to form Apple’s strategy from 1997 until today.
Steve Jobs applied design thinking by focusing on:
▪ People’s needs and desires, rather than only the needs of the business
▪ Building empathy by helping people to love Apple products
▪ The design rather than the engineering work; designers consider both the form and the
function of the product
▪ Building simple yet user-friendly products rather than complex hard-to-use products The
vision characterized above can be clearly identified in modern Apple products. Although
other competitors focus on the features and product capabilities, Apple focuses on a holistic user
experience. For example, the iMac is renowned for being quiet, having a quick wake-up, better
sound, and a high-quality display. This vision was formed in Apple’s development strategy
that includes:
Excellence in Execution
In this part, Steve tended to improve the execution process by closing 2 divisions, eliminating
70% of the new products and focusing on the higher potential products,
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reducing the product lines from 15 to just 3, and shutting facilities to move manufacturing outside
the company. Apple also launched a website for direct sale of its products and started to take an
interest in materials and how products are manufactured within a consumer-driven culture.
Platform Strategy
Apple streamlined their product portfolio to a family of products that can be produced much
more quickly while keeping the existing design elements. Also, the company targeted product
that require less repair and maintenance.
Iterative Customer Involvement

The consumer experience should be integrated into the design and development stages through
participating in usability testing. Also, the design for interfaces should focus on the user
experience.
Beautiful Products
In addition to the function of the product, the form should beautiful, which can be achieved
through continuous innovation and development. Apple also focused on the materials and
manufacturing process and took a bold approach to trying new ideas rather than sticking with the
ordinary design forms.
ACTIVITY: Watch Steve Jobs film and complete the activities:

https://www.youtube.com/watch?v=FKExD3kMgMk
1.Prepare a SWOT analysis about Apple.
Strengths Weaknesess
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Opportunities Threats
2.Look for extra information about Steve Jobs and Apple. Draw a mind map trying to explain
the company profile (philosophy, history, founders, previous ideas, etc.).
Steve Jobs
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3. Nowadays, Apple has a huge rivalry with Android. Prepare a benchmarking analysis and write
a conclusion
Characteristics Apple (iOS) Android
4. It is said that technological companies have to protect their products against copies. During the
film, Steve mentioned something related to plagiarism and IBM. Write a short text with the
key ideas about that episode. Does it exist a legal instrument in order to avoid plagiarism?
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UNIT 4: Energy and economy

1. Introduction: business operations
 Business operations
 Business
Production includesreputation
those activities involved in conceptualizing, designing, and creating products
 Types of organisations
and services. In recent years there have been dramatic changes in the way goods are produced. Today,
computers help monitor, control,analysis
 Costs and break-even and even perform work. Flexible, high-tech machines can do in
minutes what it used to take people hours to accomplish. Another important development has been
the trend toward just-in-time inventory.
The word inventory refers to the amount of

goods a business keeps available for wholesale
or retail. In just-in-time inventory, the firm
stocks only what it needs for the next day or
two. Many businesses rely on fast, global
computer communications to allow them to
respond quickly to changes in consumer
demand. Inventories are thus minimized and
businesses can invest more in product
research, development, and marketing.
Marketing is the process of identifying the goods and services that consumers need and want and
providing those goods and services at the right price, place, and time.
Businesses develop marketing strategies by conducting research to determine what products
and services potential customers think they would like to be able to purchase.
Firms also promote their products and services through such techniques as advertising and
personalized sales, which serve to inform potential customers and motivate them to purchase.
Firms that market products for which there is always some demand, such as foods and household
goods, often advertise if they face competition from other firms marketing similar products. Such
products rarely need to be sold face-to-face. On the other hand, firms that market products and
services that buyers will want to see, use, or better understand before buying, often rely on
personalized sales. Expensive and durable goods -such as automobiles, electronics, or
furniture - benefit from personalized sales, as do legal, financial, and accounting services.
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Finance involves the management of
money. All businesses must have enough
capital on hand to pay their bills, and for-
profit businesses seek extra capital to
expand their operations.
In some cases, they raise long-term capital
by selling ownership in the company.
Other common financial activities include
granting, monitoring, and collecting on
credit or loans and ensuring that customers
pay bills on time.
The financial division of any business
must also establish a good working
relationship with a bank. This is
particularly important when a business
wants to obtain a loan.
Businesses rely on effective human resource management (HRM) to ensure that they hire and keep
good employees, and that they are able to respond to conflicts between workers and management.
HRM specialists initially determine the number and type of employees that a business will need
over its first few years of operation. They are then responsible for recruiting new employees to
replace those who leave and for filling newly created positions.
A business’s HRM division also trains or arranges for the training of its staff to encourage worker
productivity, efficiency, and satisfaction, and to promote the overall success of the business.
Finally, human resource managers create workers’ compensation plans and benefit
packages for employees.
ACTIVITY: Answer the following questions
1. Give definition to the word ‘business’.
2. What is the difference between for-profit and non-profit organizations?
3. What is production?
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4. Specify the notion of ‘just-in-time inventory’.
5. What is marketing?
6. Define such business operation as finance.
7. What does the HRM involve?
ACTIVITY: Watch the following videos about BP coorporation
BP Coorporation // BP Energy Outlook

2016 // BP disaster
Describe its business activity trying to mention the four business functions in your answer.
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How does it change as a company in the near future? Justify your answer using the
information provided during the Energy Outlook.
“BP’s reputation has fallen down recently”. Explain the sentence.
2. Types of organisations
Lots of companies start as a sole trade form. It means that companies only have the minimum
resources to set up a new business. Furthermore, there are a lot of types in case you need to run a
new company. Look for information about the following types and complete the table. Write a
definition for each type of organisation too.
TYPE OF ADVANTAGES DISADVANTAGES

ORGANIZATION
Sole Traders
Ex.
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Partnerships
Ex.
Companies
(Corporations) Ex.
Non Profit
Organizations Ex.
Non
Governmental
Organizations
(NGOs)
Ex.
Charities Ex.
Pressure Groups Ex.
Definitions:
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ACTIVITY: Fill in the gaps
Moe has a small bar in Springfield. As the only owner, he is a _______

___________________. Other than acquiring a business and liquor license, his business was
very easy to set up.
His biggest problem is his ability to raise

______________. Since he has no partners or
shareholders, it is difficult for him to raise the money
required to improve or expand his establishment. Moe could
borrow money from the bank, but the problem with that is
he would have to pay____________________________.
Moe is also aware that if he builds up debts, he could

suffer from______________________________________.
This means that his personal possession (such as house,
car, savings) could be used to pay his
_______________. Also, if Barney or Homer sue Moe for
any type of negligence, Moe remains fully accountable.
It can sometimes be difficult for Moe to run his business.

He must make ALL decisions regarding finance,
marketing, operations, etc. He sometimes wonders if
having a business-minded partner would allow him to
focus more and his expertise; bartending. If he is sick, the
business could be in jeopardy. If he died, the business
might fold.
Moe enjoys the ability to make his own decisions, set his own hours, and not have to answer
to any higher boss. As the only owner, Moe also enjoys the right to keep ALL profits.
ACTIVITY: Make a definition for each concept:
Liability
Capital
ACTIVITY: Spain has specific laws in order to establish these types of organisations. Look
for information and complete the table:
Partners Capital Liability Taxes

Sole traders
SL
SA
Cooperatives
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3. Break-even point: situation
Read the following concepts:
Fixed Costs: These are costs that are independent of the sales volume or productivity of the
firm. Common examples include rent, interest on loans, salaries, machinery and insurance. These
do not change when output changes. (However, fixed costs can change over time. A business
can have their property tax, insurance, rent, etc all increase for reasons totally apart from their
level of production).
Variable Costs: These are costs that depend on the output, and will therefore increase
proportional to the increase in output. These include wages, electricity, raw materials, etc.
Added to the fixed costs, these form the total fixed costs (TFC).
Direct Costs: Direct costs can be directly associated to a certain unit, and without that unit they
are not charged. These vary depending on the type of firm and their operations.
Indirect Costs: These are also called overheads. They cannot be directly associated with a
certain unit, but must still be paid for all the operations to take place. Therefore, they tend to
be divided among all the units. Many fixed costs, like rent, are indirect costs.
Revenue: Revenue is the total income from the sales of the products, without subtracting
costs. It is calculated by:
This can also come from other sources, such as subsidies, grants, donations, fund- raising,
sponsorship, interest from the bank, dividends and the sale of assets.
Break-Even Analysis: a management tool that can be used to serve the purpose of
determining the level of sales that must be generated for a business to earn a profit.
Business can only survive if revenues are greater than costs
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ACTIVITY: Jeremy is running a bus trip to Toronto with his friends for 3 days and 2 nights.
They are going to a couple baseball games and want to do some sight seeing. He wants to
charge everyone a fixed amount regardless of the number of people who sign up.
Because he is booking in large numbers, he is able to negotiate a good price with the hotel
and also can get a group discount on tickets. He is responsible to pay for the driver's hotel
room and opts for a cheaper option away from downtown. He must also tip the driver.
Classify the following trip expenses as fixed or variable.
Expense Cost Fixed or Variable Cost?

Bus 1400/day
Hotel Rooms 120/night
Hotel Room for driver 70/night
Tickets 25/person
Food and drinks for the 200
bus
Prizes $ 100
Tip - 150
What is the fixed cost for the trip?
What is the marginal cost per attendee?
The bus can carry up to 55 passengers. He wants to charge $220/person for

the trip and have 4 people per hotel room.
What is the contribution margin?
Calculate the following
Number of Total Fixed Variable Total Profit/Loss

people Revenue Expenses Expenses Expenses
20
28
36
44
52
Do you think he is charging an appropriate price? Why/why not? What price would you
recommend?
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ACTIVITY: An e-commerce manufacturer wants to invest $85000 in making the factory mold
for a new product. Each unit will cost $2.10 to make, plus an additional $0.15 in packaging.
This good will sell for $30 each but they will incur the $5/unit shipping cost.
1. What is the fixed cost?
2. What is the variable cost?
3. What is the contribution margin?
4. What is the break even point?
5. How many units must be sold to earn $75000 in profit?
6. Chart the break-even point.
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ACTIVITY: Lisa Chan runs a children’s day care centre. The main clients are working
parents who pay a fixed $20 per child for the whole day. Children at the centre learn through
play and are engaged in activities such as art, music, dance and physical education. The
business is open for an average of 22 days each month. The firm’s expected cost and revenue
for the next year are as follows
ITEM DATA
Capacity 25 children a day
Demand 80% of capacity
Price $20/day
Materials $4/child
Rent $600/month
Salaries $1000/month
Administration $100/month
Power $140/month
Calculate the fixed costs
Calculate the break even quantity per month
Construct a fully labelled break-even chart for Lisa Chan’s Day Care Centre
Examine the strengths and weaknesses of using break even analysis for a business such
as this one.
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INTRODUCTION TO ECONOMY
1. Check what you know. Write a cross if you know the word (all of them
are related to ECONOMY)
GDP Unemployment Deficit

Interest rate Scarcity/shortage Surplus
Inflation Tariff Globalization
Tax Protectionism Goods
Supply E-commerce Stock exchange
Brainstorm about the word ECONOMY and copy the definition.
2. Why do you think Spain is in CRISIS?
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UNIT 5: What is the economy?

1. Origins of economy
 Origins of economy
 Scarcity and needs
Economics may appear to be
 Microeconomics andthemacroeconomics
study of complicated tables and charts, statistics and numbers,
but, more specifically, it is the study of what constitutes rational human behavior in the
 Circular flow of income: economic agents
endeavor to fulfill needs and wants.
As an individual, for example, you face the problem of having only limited resources with
which to fulfill your wants and needs, as a result, you must make certain choices with your
money. You'll probably spend part of your money on rent, electricity and food. Then you might
use the rest to go to the movies and/or buy a new pair of jeans. Economists are interested in the
choices you make, and inquire into why, for instance, you might choose to spend your money
on a new DVD player instead of replacing your old TV. They would want to know whether you
would still buy a carton of cigarettes if prices increased by $2 per pack. The underlying essence
of economics is trying to understand how both individuals and nations behave in response to
certain material constraints.
We can say, therefore, that economics, often

referred to as the "dismal science", is a study of
certain aspects of society. Adam Smith (1723 -
1790), the "father of modern economics" and
author of the famous book "An Inquiry into the
Nature and Causes of the Wealth of Nations",
spawned the discipline of economics by trying to
understand why some nations prospered while
others lagged behind in poverty. Others after him
also explored how a nation's allocation of
resources affects its wealth.
To study these things, economics makes the

assumption that human beings will aim to fulfill
their self-interests. It also assumes that
individuals are rational in their efforts to fulfill
their unlimited wants and needs. Economics,
therefore, is a social science, which
examines people behaving according to their self-interests. The definition set out at the turn of
the twentieth century by Alfred Marshall, author of "The Principles Of Economics" (1890),
reflects the complexity underlying economics: "Thus it is on one side the study of wealth; and
on the other, and more important side, a part of the study of man."
In order to begin our discussion of economics, we first need to understand (1) the concept of
scarcity and (2) the two branches of study within economics: microeconomics
and macroeconomics.
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ACTIVITIES
ACTIVITY 1: Find information about Karl Marx, Adam Smith and John Maynard Keynes.
Draw a mind map (teamwork) and share it with the rest of the class.
ACTIVITY 2: Explain with your own words the meaning of „invisible hand“.
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ACTIVITY 3: What are the main differences between microeconomics and
macroeconomics? Use a newspaper in order to find out microeconomics and
macroeconomics news. Stick your news on the paper
Differences:
News:
ACTIVITY 4: What would you change or improve about our economy? DEBATE
Try to think of all subjects that the government controls: Banks, Education, Health, Energy,
Taxes, Defence, Police, Transports, Law, Labour Market, Housing Market, Subsidies, Grants,
etc.
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2. Scarcity
Scarcity, a concept we already implicitly discussed in the introduction to this tutorial, refers to
the tension between our limited resources and our unlimited wants and needs. For an individual,
resources include time, money and skill. For a country, limited resources include natural
resources, capital, labor force and technology.
Because all of our resources are limited in comparison to all of our wants and needs, individuals
and nations have to make decisions regarding what goods and services they can buy and which
ones they must forgot. For example, if you choose to buy one DVD as opposed to two video
tapes, you must give up owning a second movie of inferior technology in exchange for the
higher quality of the one DVD. Of course, each individual and nation will have different values,
but by having different levels of (scarce) resources, people and nations each form some of these
values as a result of the particular scarcities with which they are faced.
So, because of scarcity, people and economies must make decisions over how to allocate their
resources. Economics, in turn, aims to study why we make these decisions and how we allocate our
resources most efficiently.
ACTIVITY: Humans have unlimited needs but limited resources. What do you understand as a need? Look for Maslow’s
Abraham Maslow developed a theory about motivation and needs. He said that people have five level of needs:
Could you explain your particular situation?
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ACTIVITY: Watch this video on YOUTUBE: Episode 2: Scarcity and Choice
https://www.youtube.com/watch?feature=player_embedded&v=yoVc_S_gd_0
And answer these questions:

1) What’s the problem having unlimited wants?
2) What’s the definition of economics?
3) What’s the meaning of scarcity?
4) How is income distributed in a capitalist system?
5) How can you recognize an economic good instead of a free good?
6) What do you think a rational decision is?
7) Think of some economic decisions you make every day. Are they rational?
3. Macro and Microeconomics
Macro and microeconomics are the two vantage points from which the economy is observed.
Macroeconomics looks at the total output of a nation and the way the nation allocates its limited
resources of land, labor and capital in an attempt to maximize production levels and promote
trade and growth for future generations. After observing the society as a whole, Adam Smith
noted that there was an "invisible hand" turning the wheels of the economy: a market force that
keeps the economy functioning.
Microeconomics looks into similar issues, but on the level of the individual people and firms
within the economy. It tends to be more scientific in its approach, and studies the parts that
make up the whole economy. Analyzing certain aspects of human behavior, microeconomics
shows us how individuals and firms respond to changes in price and why they demand what
they do at particular price levels.
Micro and macroeconomics are intertwined; as economists gain understanding of certain

phenomena, they can help nations and individuals make more informed decisions when
allocating resources. The systems by which nations allocate their resources can be placed on a
spectrum where the command economy is on the one end and the market economy is on the
other. The market economy advocates forces within a competitive market, which constitute the
"invisible hand", to determine how resources should be allocated. The command economic
system relies on the government to decide how the country's resources would best be
allocated. In both systems, however, scarcity and
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unlimited wants force governments and individuals to decide how best to manage resources and
allocate them in the most efficient way possible. Nevertheless, there are always limits to what
the economy and government can do.
The circular flow of income: This graph will show you how the government,
banks, households and business interact with money.
Economic Agents: Participants in the economy such as households, governments and business
firms that engage in specialization, production, exchange, and consumption.
Households, provide their labour for firms who produce goods and services. In return people
in work receive payments, such as wages, which in turn are spent on the output of firms. Not all
of current income is spent - some is saved.
Functions:
1) Consume the goods and services
2) Work in firms in exchange of a wage.
3) Acquire real and financial assets.
4) Pay taxes.
Business firms, Commercial organisations that sell goods or services in exchange for money.
They want to make profit. Also people in households might work for business and business pay
wages to them.
1) Produce goods and services intended for sale to generate profits.
2) Acquire real and financial assets.
3) Pay wages to workers.
4) Pay taxes.
Governments. The government is a group of people who run the country. The prime minister
has chosen the people in the group to help him/her run the country.
1) Collect taxes.
2) Decide how to spend the money (government spending).
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3) Government spending on state provided goods and services and also pay subsidies
(Transfers).
4) Control the economy by laws.
Financial institutions (banks), institutions that collect funds from the public to place in
financial assets such as stocks, bonds, money market instruments, bank deposits, or loans.
Banks pay interest on deposits and invest the deposit money mostly in loan:
1) Collect savings.
2) Loan money for investments and spending.
3) Commercialize financial assets.
ACTIVITY: Think about your role in your family, and which economics agents you (all of
you) are and how you interact.
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UNIT 6: Microeconomics

1. Production possibility frontier
 Production possibility frontier
 Opportunity cost
(VIDEO: https://www.youtube.com/watch?v=O6XL__2CDPU)
 Supply and demand
 Elasticity
Under the field of macroeconomics, the production possibility frontier (PPF) represents the
 Markets
point at which an economy is most efficiently producing its goods and services and, therefore,
allocating its resources in the best way possible. If the economy is not producing the quantities
indicated by the PPF, resources are being managed inefficiently and the production of society will
dwindle. The production possibility frontier shows there are limits to production, so an
economy, to achieve efficiency, must decide what combination of goods and
services can be produced. Let's turn to the chart below. Imagine an economy that can
produce only wine and cotton. According to the PPF, points A, B and C - all appearing on the curve
- represent the most efficient use of resources by the economy. Point X represents an inefficient
use of resources, while point Y represents the goals that the economy cannot attain with its
present levels of resources.
As we can see, in order for this economy to

produce more wine, it must give up some of the
resources it uses to produce cotton (point A). If
the economy starts producing more cotton
(represented by points B and C), it would have
to divert resources from making wine and,
consequently, it will produce less wine than it is
producing at point A. As the chart shows, by
moving production from point A to B, the
economy must decrease wine production by a
small amount in comparison to the increase in
cotton output. However, if the economy
moves from point B to C, wine output will be significantly reduced while the increase in cotton
will be quite small. Keep in mind that A, B, and C all represent the most efficient allocation of
resources for the economy; the nation must decide how to achieve the PPF and which
combination to use. If more wine is in demand, the cost of increasing its output is proportional to
the cost of decreasing cotton production.
Point X means that the country's resources are not being used efficiently or, more specifically,
that the country is not producing enough cotton or wine given the potential of its resources.
Point Y, as we mentioned above, represents an output level that is currently unreachable by this
economy. However, if there was a change in technology while the level of land, labor and
capital remained the same, the time required to pick cotton and grapes would be reduced.
Output would increase, and the PPF would be pushed outwards. A new curve, on which Y
would appear, would represent the new efficient allocation of resources.
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When the PPF shifts outwards, we know there is growth in an economy. Alternatively, when the
PPF shifts inwards it indicates that the economy is shrinking as a result of a decline in its most
efficient allocation of
resources and optimal production capability. A
shrinking economy could be a result of a
decrease in supplies or a deficiency in
technology.
An economy can be producing on the PPF

curve only in theory. In reality, economies
constantly struggle to reach an optimal
production capacity. And because scarcity
forces an economy to forgo one choice for
another, the slope of the PPF will always be
negative; if production of product A increases
then production of product B will have to
decrease accordingly
ACTIVITY: Draw the PPF with the following table and indicate an inefficient and an impossible combination.
ACTIVITY Draw the PPF with the information you have in the table:
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2. Opportunity Cost
Opportunity cost is the value of what is foregone in order to have something else. This value is
unique for each individual. You may, for instance, forgo ice cream in order to have an extra
helping of mashed potatoes. For you, the mashed potatoes have a greater value than dessert. But
you can always change your mind in the future because there may be some instances when the
mashed potatoes are just not as attractive as the ice cream. The opportunity cost of an
individual's decisions, therefore, is determined by his or her needs, wants, time and resources
(income).
This is important to the PPF because a country will decide how to best allocate its resources
according to its opportunity cost. Therefore, the previous wine/cotton example shows that if the
country chooses to produce more wine than cotton, the opportunity cost is equivalent to the
cost of giving up the required cotton production. Let's look at another example to
demonstrate how opportunity cost ensures that an individual will buy the least expensive of two
similar goods when given the choice. For example, assume that an individual has a choice
between two telephone services. If he or she were to buy the most expensive service, that
individual may have to reduce the number of times he or she goes to the movies each month.
Giving up these opportunities to go to the movies may be a cost that is too high for this person,
leading him or her to choose the less expensive service.
Remember that opportunity cost is different for each individual and nation. Thus, what is valued
more than something else will vary among people and countries when decisions are made about
how to allocate resources.
ACTIVITY: Write the opportunity cost in case you decide to go to the cinema with your
friends.
1. Makeba Electronics produces

20 laptop computers0and blu-ray players. The company finds that on an
16 1
12 2 Laptopsblu-ray Playe
8 3
4 4
0 5
a) Using this information, draw the PPC for Makeba Electronics.
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b) What is the opportunity cost of a blu-ray player in terms of laptops?
2. The Povungnituk Office Supply Company observed that by allocating its fixed production budget b
CopiersProjectors
15 0
14 1
12 2
9 3
5 4
0 5
Plot the PPC for Povungnituk Office Supply Company.
What is the opportunity cost of: The first projector

The second projector
What do you notice about the opportunity cost of data projectors as more and more of them are produced?
3. Referring to Povungnituk in Question 2, suppose the company receives

an increase in its production budget, so that it can now produce more
copiers and more data projectors.
a) Show on a graph, what the new PPC might look like.
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b) Show the impact of an improvement in technology to copier production only.
c) If the firm dismisses some of its employees, how will the PPC be affected?
d) What will happen to the PPC if employees are shifted from copier production to
projector production?
4.Following is a table showing the production possibilities for widgets and remistrams:
Combination Books Songs

A 0 20
B 1 18
C 2 14
D 3 8
E 4 0
a) What is the opportunity cost of producing: The first widget?
The second widget? Two widgets?

The third widget? Three widgets? The fourth widget?
Four widgets?
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3. Supply and demand
(VIDEO: https://www.youtube.com/watch?v=LwLh6ax0zTE)
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the
backbone of a market economy. Demand refers to how much (quantity) of a product or service
is desired by buyers. The quantity demanded is the amount of a product people are willing to
buy at a certain price; the relationship between price and quantity demanded is known as the
demand relationship. Supply represents how much the market can offer. The quantity supplied
refers to the amount of a certain good producers are willing to supply when receiving a certain
price. The correlation between price and how much of a good or service is supplied to the market is
known as the supply relationship. Price, therefore, is a reflection of supply and demand.
The Law of Demand
The law of demand states that, if all other

factors remain equal, the higher the price
of a good, the less people will demand that
good. In other words, the higher the price,
the lower the quantity demanded. The
amount of a good that buyers purchase at a
higher price is less because as the price of
a good goes up, so does the opportunity
cost of buying that good. As a result,
people will naturally avoid buying a
product that will force them to forgo the
consumption of something else they value
more. The chart below shows that the
curve is a downward slope.
A, B and C are points on the demand curve. Each point on the curve reflects a direct correlation
between quantity demanded (Q) and price (P). So, at point A, the quantity demanded will be Q1
and the price will be P1, and so on. The demand relationship curve illustrates the negative
relationship between price and quantity demanded. The higher the price of a good the lower the
quantity demanded (A), and the lower the price, the more the good will be in demand (C).
B. The Law of Supply
Like the law of demand, the law of

supply demonstrates the quantities that
will be sold at a certain price. But unlike
the law of demand, the supply
relationship shows an upward slope.
This means that the higher the price, the
higher the quantity supplied. Producers
supply more at a higher price because
selling a higher quantity at a higher
price increases revenue.
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A, B and C are points on the supply curve. Each point on the curve reflects a direct correlation
between quantity supplied (Q) and price (P). At point B, the quantity supplied will be Q2 and
the price will be P2, and so on.
C. Supply and Demand Relationship
Now that we know the laws of supply and demand, let's turn to an example to show how supply
and demand affect price.
Imagine that a special edition CD of your favorite band is released for $20. Because the record
company's previous analysis showed that consumers will not demand CDs at a price higher than
$20, only ten CDs were released because the opportunity cost is too high for suppliers to produce
more. If, however, the ten CDs are demanded by 20 people, the price will subsequently rise
because, according to the demand relationship, as demand increases, so does the price.
Consequently, the rise in price should prompt more CDs to be supplied as the supply relationship
shows that the higher the price, the higher the quantity supplied.
If, however, there are 30 CDs produced and demand is still at 20, the price will not be pushed
up because the supply more than accommodates demand. In fact after the 20 consumers have
been satisfied with their CD purchases, the price of the leftover CDs may drop as CD producers
attempt to sell the remaining ten CDs. The lower price will then make the CD more available to
people who had previously decided that the opportunity cost of buying the CD at $20 was too
high.
D. Equilibrium
When supply and demand are equal (i.e.

when the supply function and demand
function intersect) the economy is said to be
at equilibrium. At this point, the allocation
of goods is at its most efficient because the
amount of goods being supplied is exactly
the same as the amount of goods being
demanded. Thus, everyone (individuals, firms,
or countries) is satisfied with the current
economic condition. At the given price,
suppliers are selling all the goods that they
have produced and consumers are getting all
the goods that they are demanding.
As you can see on the chart, equilibrium occurs at the intersection of the demand and supply
curve, which indicates no allocative inefficiency. At this point, the price of the goods will be P*
and the quantity will be Q*. These figures are referred to as equilibrium price and quantity.
In the real market place equilibrium can only ever be reached in theory, so the prices of goods
and services are constantly changing in relation to fluctuations in demand and supply.
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ACTIVITY: Demand and supply in a market are described by the equations
Qd = 66-3P
Qs = -4+2P
Solve algebraically to find equilibrium P and Q. Draw the graph.
ACTIVITY: Demand and supply in a market are described by the equations Qd =

120-8P
Qs = -6+4P
Solve algebraically to find equilibrium P and Q. Draw the graph.
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ACTIVITY: El preu de la llet i de molts productes agrícoles ve fixat per la interrelació de l'oferta i la demanda dins un m
Preu (cèntims d’euro) Quantitat demanada en litres Quantitat oferida en litres
90 120 150
80 140 140
70 160 130
60 180 120
Representa gràficament (en un eix de coordinades) les quantitats demanades i oferides d’aquest producte a cada preu. Quin ser
E. Disequilibrium
Disequilibrium occurs whenever the price or quantity is not equal to P* or Q*. Excess
Supply
If the price is set too high, excess supply will be created within the economy and there will be
allocative inefficiency.
At price P1 the quantity of goods that the

producers wish to supply is indicated by
Q2. At P1, however, the quantity that the
consumers want to consume is at Q1, a
quantity much less than Q2. Because Q2 is
greater than Q1, too much is being
produced and too little is being consumed.
The suppliers are trying to produce more
goods, which they hope to sell to increase
profits, but those consuming the goods
will find the product less attractive and
purchase less because the price is too high.
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Excess Demand
Excess demand is created when price is set

below the equilibrium price. Because the price
is so low, too many consumers want the good
while producers are not making enough of it.
In this situation, at price P1, the quantity of

goods demanded by consumers at this price is
Q2. Conversely, the quantity of goods that
producers are willing to produce at this price is
Q1. Thus, there are too few goods being
produced to satisfy the wants (demand) of the
consumers. However, as consumers have to
compete with one other
to buy the good at this price, the demand will push the price up, making suppliers want to
supply more and bringing the price closer to its equilibrium.
F. Shifts vs. Movement (VIDEO: https://www.youtube.com/watch?v=V0tIOqU7m-c)
For economics, the "movements" and "shifts" in relation to the supply and demand curves
represent very different market phenomena:
1. Movements
A movement refers to a change along a curve. On the demand curve, a movement denotes a
change in both price and quantity demanded from one point to another on the curve. The
movement implies that the demand relationship remains consistent. Therefore, a movement
along the demand curve will occur when the price of the good changes and the quantity
demanded changes in accordance to the original demand relationship. In other words, a
movement occurs when a change in the quantity demanded is caused only by a change in price,
and vice versa.
Like a movement along the demand curve, a movement along the supply curve means that the
supply relationship remains consistent. Therefore, a movement along the supply curve will occur
when the price of the good changes and the quantity supplied changes in accordance to the
original supply relationship. In other words, a movement occurs when a change in quantity
supplied is caused only by a change in price, and vice versa.
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2. Shifts
A shift in a demand or supply curve occurs when a good's quantity demanded or supplied changes even
though price remains the same.
For instance, if the price for a bottle of beer was
$2 and the quantity of beer demanded increased
from Q1 to Q2, then there would be a shift in the
demand for beer. Shifts in the demand curve imply
that the original demand relationship has changed,
meaning that quantity demand is affected by a
factor other than price. A shift in the demand
relationship would occur if, for instance, beer
suddenly became the only type of alcohol
available for consumption.
Conversely, if the price for a bottle of beer was

$2 and the quantity supplied decreased from
Q1 to Q2, then there would be a shift in the
supply of beer. Like a shift in the demand
curve, a shift in the supply curve implies that
the original supply curve has changed,
meaning that the quantity supplied is effected
by a factor other than price. A shift in the
supply curve would occur if, for instance, a
natural disaster caused a mass shortage of
hops; beer manufacturers would be forced to
supply less beer for the same price.
ACTIVITY: Indica les variacions en les corbes
Moviment Desplaçament Desplaçament Desplaçament Desplaçament

sobre la d’oferta cap a la de l’oferta cap a de la demanda de la demanda
mateixa dreta l’esquerra cap a la dreta cap a
corba l’esquerra
Puja el preu del
meu
producte
Baixa el preu
del rival
Puja el preu del
complementari
Millora
tecnológica
Obsolescència
del nostre be
4.Elasticity (VIDEO: https://www.youtube.com/watch?v=HHcblIxiAAk)
The degree to which a demand or supply curve reacts to a change in price is the curve's
elasticity. Elasticity varies among products because some products may be more essential to the
consumer. Products that are necessities are more insensitive to price changes because
consumers would continue buying these products despite price increases. Conversely, a price
increase of a good or service that is considered less of a
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necessity will deter more consumers because the opportunity cost of buying the product will
become too high.
A good or service is considered to be highly elastic if a slight change in price leads to a sharp
change in the quantity demanded or supplied. Usually these kinds of products are readily
available in the market and a person may not necessarily need them in his or her daily life. On
the other hand, an inelastic good or service is one in which changes in price witness only
modest changes in the quantity demanded or supplied, if any at all. These goods tend to be
things that are more of a necessity to the consumer in his or her daily life.
To determine the elasticity of the supply or demand curves, we can use this simple equation:
Elasticity = (% change in quantity / % change in price)
If elasticity is greater than or equal to one, the curve is considered to be elastic. If it is less than
one, the curve is said to be inelastic.
As we mentioned previously, the demand curve is a negative slope, and if there is a large decrease
in the quantity demanded with a small increase in price, the demand curve looks flatter, or more
horizontal. This flatter curve means that the good or service in question is elastic.
Meanwhile, inelastic demand is represented with a much more upright curve as quantity
changes little with a large movement in price.
Elasticity of supply works similarly. If a change in price results in a big change in the amount
supplied, the supply curve appears flatter and is considered elastic. Elasticity in this case would
be greater than or equal to one.
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On the other hand, if a big change in price only results in a minor change in the quantity supplied, the
supply curve is steeper and its elasticity would be less than one.
ACTIVITY: Calculate the elasticity of these goods
Quantity 2012 Price 2012 Quantity 2013 Price 2013
Product A 2000 2,5 1800 3
Product B 1000 2 3000 1
Product C 340 1,5 400 1,23
Product D 2040 0,75 3000 0,4
Product E 20000 100 10000 200
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A. Factors Affecting Demand Elasticity
There are three main factors that influence a demand's price elasticity:
1. The availability of substitutes - This is probably the most important factor influencing the
elasticity of a good or service. In general, the more substitutes, the more elastic the demand will
be. For example, if the price of a cup of coffee went up by $0.25, consumers could replace their
morning caffeine with a cup of tea. This means that coffee is an elastic good because a raise in
price will cause a large decrease in demand as consumers start buying more tea instead of
coffee.
However, if the price of caffeine were to go up as a whole, we would probably see little change
in the consumption of coffee or tea because there are few substitutes for caffeine. Most people
are not willing to give up their morning cup of caffeine no matter what the price. We would say,
therefore, that caffeine is an inelastic product because of its lack of substitutes. Thus, while a
product within an industry is elastic due to the availability of substitutes, the industry itself
tends to be inelastic. Usually, unique goods such as diamonds are inelastic because they have
few if any substitutes.
2. Amount of income available to spend on the good - This factor affecting demand
elasticity refers to the total a person can spend on a particular good or service. Thus, if the price
of a can of Coke goes up from $0.50 to $1 and income stays the same, the income that is
available to spend on coke, which is $2, is now enough for only two rather than four cans of
Coke. In other words, the consumer is forced to reduce his or her demand of Coke. Thus if there
is an increase in price and no change in the amount of income available to spend on the good,
there will be an elastic reaction in demand; demand will be sensitive to a change in price if
there is no change in income.
3. Time - The third influential factor is time. If the price of cigarettes goes up $2 per pack, a
smoker with very few available substitutes will most likely continue buying his or her daily
cigarettes. This means that tobacco is inelastic because the change in price will not have a
significant influence on the quantity demanded. However, if that smoker finds that he or she
cannot afford to spend the extra $2 per day and begins to kick the habit over a period of time,
the price elasticity of cigarettes for that consumer becomes elastic in the long run.
5.Markets
Economists assume that there are a number of different buyers and sellers in the marketplace.
This means that we have competition in the market, which allows price to change in response to
changes in supply and demand. Furthermore, for almost every product there are substitutes, so if
one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a
market with many buyers and sellers, both the consumer and the supplier have equal ability to
influence price.
In some industries, there are no substitutes and there is no competition. In a market that has only
one or few suppliers of a good or service, the producer(s) can control price, meaning that a
consumer does not have choice, cannot maximize his or her total utility and has have very little
influence over the price of goods.
A monopoly is a market structure in which there is only one producer/seller for a product. In other
words, the single business is the industry. Entry into such a market is restricted due to high
costs or other impediments, which may be economic, social or political. For instance, a
government can create a monopoly over an industry that it wants to control,
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such as electricity. Another reason for the barriers against entry into a monopolistic industry is
that oftentimes, one entity has the exclusive rights to a natural resource. For example, in Saudi
Arabia the government has sole control over the oil industry. A monopoly may also form when a
company has a copyright or patent that prevents others from entering the market. Pfizer, for
instance, had a patent on Viagra.
In an oligopoly, there are only a few firms that make up an industry. This select group of firms
has control over the price and, like a monopoly, an oligopoly has high barriers to entry. The
products that the oligopolistic firms produce are often nearly identical and, therefore, the
companies, which are competing for market share, are interdependent as a result of market
forces. Assume, for example, that an economy needs only 100 widgets. Company X produces
50 widgets and its competitor, Company Y, produces the other 50. The prices of the two brands
will be interdependent and, therefore, similar. So, if Company X starts selling the widgets at a
lower price, it will get a greater market share, thereby forcing Company Y to lower its prices as
well.
There are two extreme forms of market structure: monopoly and, its opposite, perfect
competition. Perfect competition is characterized by many buyers and sellers, many products
that are similar in nature and, as a result, many substitutes. Perfect competition means there are few,
if any, barriers to entry for new companies, and prices are determined by supply and demand.
Thus, producers in a perfectly competitive market are subject to the prices determined by the
market and do not have any leverage. For example, in a perfectly competitive market, should a
single firm decide to increase its selling price of a good, the consumers can just turn to the
nearest competitor for a better price, causing any firm that increases its prices to lose market
share and profits.
ACTIVITY: Complete the following sentences
 ______________ is best described as the study of humans behaving in response to

having only limited resources to fulfill unlimited wants and needs.
 ______________ refers to the limited resources in an economy. Macroeconomics is
the study of the economy as a whole. Microeconomics analyzes the individual people
and companies that make up the greater economy.
 The______________________________allows us to determine how an economy
can allocate its resources in order to achieve optimal output. Knowing this will lead
countries to specialize and trade products amongst each other rather than each producing
all the products it needs.
 _______ and ________ refer to the relationship price has with the quantity
consumers demand and the quantity supplied by producers. As price increases,
quantity demanded decreases and quantity supplied increases.
tells us how much quantity demanded or supplied changes when
there is a change in price. The more the quantity changes, the more _______
the good or service. Products whose quantity supplied or demanded does not change
much with a change in price are considered ___________
 Market economies are assumed to have many buyers and sellers, high competition
and many substitutes. ____________ characterize industries in which the supplier
determines prices and high barriers prevent any competitors
from entering the market. _____________ are industries with a few
interdependent companies. _____________ represents an economy with
many businesses competing with one another for consumer interest and profits.
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ACTIVITY.-Summarize the information about markets, using the following table:
PERFECT
COMPETITION
MARKETS
MONOPOLY
OLIGOPOLY
ACTIVITY: Write a definition: USE YOUR MOBILE PHONE IN CASE YOU NEED
EXTRA INFORMATION.
Market share:
Barriers to entry in a market:
Natural resource:
Consumer vs. Customer:
OPEC (OPEP):
Patent:
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UNIT 7: Macroeconomics
The contents
1. Gross for thisProduct
Domestic unit are: (GDP)
 Gross Domestic Product
 toOther
In order analyzemacroindicators
the health of an economy or examine economic growth, it's necessary to have a
way tomeasure
Unemployment
the size of an economy. Economists usually measure the size of an economy by
 Inflation
the amount of stuff it produces. This makes sense in a lot of ways, mainly because an economy's
output in a given period of time is equal to the economy's income, and the economy's level of
income is one of the main determinants of its standard of living and societal welfare.
It may seem strange that output, income and expenditure (on domestic goods) in an economy
are all the same quantity, but this observation is simply the result of the fact that there is both a
buying and a selling side to every economic transaction. For example, if an individual bakes a loaf
of bread and sells it for $3, he has created $3 of output and made $3 in income. Similarly, the
buyer of the loaf of bread spent $3, which counts in the expenditure column. The equivalence
between overall output, income and expenditure is simply a result of this principle aggregated
over all of the goods and services in an economy.
Economists measure these quantities using the concept of Gross Domestic Product. Gross
Domestic Product, commonly referred to as GDP, is the "market value of all final goods and
services produced within a country in a given period of time." It's important to understand
precisely what this means, so it's worth giving some thought to each of the definition's
components:
GDP) is generally thought of as a measure of an economy's aggregate output or income, but, as it

turns out, GDP also represents aggregate expenditure on an economy's goods and services.
Economists divide the spending on an economy's goods and services into four components:
Consumption, Investment, Government Purchases, and Net Exports.
Consumption (C): Consumption, represented by the letter C, is the amount that households
(i.e. not businesses or the government) spend on new goods and services. The one exception to
this rule is housing, since expenditure on new housing is placed in the investment category. This
category counts all consumption spending regardless of whether the spending is on domestic or
foreign goods and services, and the consumption of foreign goods is corrected for in the net
exports category.
Investment (I): Investment, represented by the letter I, is the amount that households and
businesses spend on items that are used to make more goods and services.
The most common form of investment is in capital equipment for businesses, but it's important
to remember that households' purchases of new housing also counts as investment for GDP
purposes. Like consumption, investment expenditure can be used to purchase capital and other
items from either domestic or foreign producers, and this is corrected for in the net exports
category.
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Inventory is another common investment category for businesses, since items that are produced
but not sold in a given time period are considered as having been purchased by the company
that made them. Therefore, the accumulation of inventory is considered positive investment, and
the liquidation of existing inventory is counted as negative investment.
Government Purchases (G): In addition to households and businesses, the government can
also consume goods and services and invest in capital and other items. These government
purchases are represented by the letter G in the expenditure calculation. It's important to keep in
mind that only government spending that goes towards producing goods and services is counted
in this category, and "transfer payments" such as welfare and social security are not counted as
government purchases for the purposes of GDP, mainly because transfer payments do not
directly correspond to any type of production.
Net Exports (NX): Net Exports, represented by NX, is simply equal to the amount of
exports in an economy (X) minus the number of imports in that economy (IM), where exports
are goods and services produced domestically but sold to foreigners and imports are goods and
services produced by foreigners but purchased domestically. In other words, NX = X - IM.
Net exports is an important component of GDP for two reasons. First, items that are produced
domestically and sold to foreigners should be counted in GDP, since these exports
representdomestic production. Second, imports should be subtracted out from GDP since they
represent foreign rather than domestic production but were allowed to sneak into the
consumption, investment and government purchases categories.
Putting the expenditure components together yields one of the most well-known
macroeconomic identities:
Y = C + I + G + NX
In this equation, Y represents real GDP (i.e. domestic output, income, or expenditure on
domestic goods and services) and the items on the right-hand side of the equation represent the
components of expenditure listed above. In the US, consumption tends to be the largest
component of GDP by far, followed by government purchases and then investment. Net exports
tends to be negative since the US typically imports more than it exports.
2. Other macroeconomic indicators
Today, most economists, as well as people who write or speak about the economy, use
Gross Domestic Product as the standard measure of the size of an economy. This was not
always the case, however, and there are reasons why economists might specifically want to look
at some variations on GDP. Five common variations are explained here:
 Gross National Product (GNP): Rather than counting all income earned within a country's
borders regardless of who produces it, as with GDP, gross national product counts all income
earned by the permanent residents of a country. If all of the residents of a country worked within
that country and no foreigners worked in the county, GNP and GDP would be the same. As
workers start crossing country borders, on the other hand, GNP and GDP become noticeably
different, but still very similar, measures of income.
 Net National Product (NNP): Technically speaking, net national product is equal to gross
national product minus depreciation. Depreciation is simply the loss in value of capital and
assets due to use, so it's helpful to think of NNP as the part of GNP that went
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to make new stuff as opposed to making stuff to replace items that were getting worn out. (Note
that you could technically define a net version of any of the measures listed here by subtracting
out depreciation.)
 National Income (NI): National income is equal to net national product after indirect
businesstaxes (sales taxes, excise taxes, etc.) are subtracted out and business subsidies
are added in. In this way, national income represents the payments to owners of the
factors of production. This includes the owners of labor (i.e. workers), as well as
owners of capital, such as land, buildings, and money, who lend out this capital in
return for interest payments.
 Personal Income (PI): Personal income represents income received specifically by
individuals and by companies that are not classified as corporations. Therefore,
personal income subtracts out items such as retained earnings of corporations and
corporate income taxes. On the other hand, personal income includes transfer payments
from the government such as welfare and Social Security.
 Disposable Personal Income: Disposable personal income is equal to personal income
minus government obligations. These government obligations include not only taxes but
also fines and other related payments.
In general, all of these quantities tend to move roughly in tandem, so they all tend to give
roughly the same picture of an economy. In order to avoid confusion, economists usually use gross
domestic product only to describe the size of an economy.
ACTIVITAT 1: Calculate the GDP::
 Private consumption: 600 €.

 Investment: 400 €.
 Government purchases: 200 €.
 Exports: 150€
 Imports: 100€
ACTIVITAT 5: Calculate the GDP:
Government purchases 2.000 Private consumption 6.500

Private savings 650 Exports 3.000
Imports 1.007 Investments 2.000
Taxes 1.500
.
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ACTIVITAT 2: A quins components del PIB (despesa) afecten les següents operacions?
a)L'ajuntament paga el sou dels seus funcionaris municipals b)La

família García es compra una casa a Marbella
c) L'Opel de Saragossa ven 5 Corses que tenia en estoc
d) La família Pérez se'n va de vacances a Mallorca
e) La família Pérez se'n va de vacances a Malta
f) Els alemanys compren taronges de València
g) Et compres un CD de Bach per escoltar bona música
3. Unemployment
Most people understand intuitively that being unemployed means not having a job. That said,
it's important to understand more precisely how unemployment is measured in order to properly
interpret and make sense of the numbers that appear in the newspaper and on television.
Officially, a person is unemployed if he or she is in the labor force but does not have a job.
Therefore, in order to calculate unemployment, we need to understand how to measure the labor
force.
The Labor Force: The labor force in an economy consists of those people who want to work.
The labor force is not equal to the population, however, since there are usually people in a
society who either don't want to work or are unable to work. Examples of these groups include
full-time students, stay-at-home parents, and the disabled. (Note that "work" in an economic
sense strictly refers to work outside of the home or school, since, in a general sense, students
and stay-at-home parents do plenty of work!) For specific statistical purposes, only individuals
age 16 and older are counted in the potential labor force, and they are only counted in the labor
force if they are actively working or have looked for work in the past four weeks.
Employment: Obviously, people are counted as employed if they have full-time jobs. That
said, people are also counted as employed if they have part-time jobs, are self- employed, or
work for a family business(even if they don't explicitly get paid for doing so). In addition, people
are counted as employed if they are on vacation, maternity leave, etc.
Unemployment: People are counted as unemployed in an official sense if they are in the labor
force and not employed. More precisely, unemployed workers are people who are able to work,
have actively looked for work in the past four weeks, but have not found or taken a job or been
recalled to a previous job.
The Unemployment Rate: The unemployment rate is reported as the percentage of the labor
force that is counted asunemployed. Mathematically, the unemployment rate is as follows:
Unemployment rate = (# of unemployed / labor force) x 100%
Notice that one can also refer to an "employment rate" that would just be equal to 100% minus
the unemployment rate, or
Employment rate = (# of employed / labor force) x 100%
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The Labor Force Participation Rate: Because output per worker is ultimately what
determines the standard of living in an economy, it's important to understand not only how
many people who want to work are actually working, but also how much of the overall
population wants to work. Therefore, economists define the labor force participation rate as
follows:
Labor force participation rate = (labor force / adult population) x 100%
Problems With the Unemployment Rate: Because the unemployment rate is measured as
a percentage of the labor force, an individual is not technically counted as unemployed if she
has gotten frustrated with looking for a job and has given up on trying to find work. These
"discouraged workers" would, however, probably take a job if it came along, which implies that the
official unemployment rate understates the true rate of unemployment. This phenomenon also
leads to counterintuitive situations where the number of employed people and the number of
unemployed people can move in the same rather than opposite directions.
In addition, the official unemployment rate can understate the true unemployment rate because
it doesn't account for people who are underemployed- i.e. working part-time when they would
like to be working full-time- or who are working at jobs that are below their skill levels or pay
grades. Furthermore, the unemployment rate doesn't doesn't report how long individuals have
been unemployed, even though duration of unemployment is clearly an important measure.
Unemployment Statistics: Official unemployment statistics in the United States are

collected by the Bureau of Labor Statistics. Clearly, it's unreasonable to ask every person in the
country whether he or she is employed or looking for work each month, so the BLS relies on a
representative sample of 60,000 households from the Current Population Survey. The Bureau of
Labor Statistics reports the unemployment rate as defined about as well as five other measures
of unemployment, which you can see here.
Simply put, unemployment is a situation in which an individual in an economy is looking for a

job and can't find one. That said, economists divide unemployment into a number of different
categories, since identifying types of unemployment more precisely sheds some light on why
unemployment occurs and what can be done about it.
Voluntary versus Involuntary Unemployment: At a very basic level, unemployment can

be broken down into voluntary unemployment- unemployment due to people willingly leaving
previous jobs and and now looking for new ones- and involuntary unemployment- unemployment
due to people getting laid off or fired from their previous jobs and needing to find work
elsewhere. (Note, however, that people who leave jobs and don't look for new ones are not
considered unemployed.) Not surprisingly, economists generally view involuntary unemployment
as a larger problem than voluntary unemployment since voluntary unemployment likely reflects
utility-maximizing household choices.
Frictional Unemployment: The easiest type of unemployment to explain is known as

frictional unemployment. Frictional unemployment is unemployment that occurs because it
takes workers some time to move from one job to another. While it may be the case that some
workers find new jobs before they leave their old ones, a lot of workers leave or lose their jobs
before they have other work lined up. In these cases, a worker must look around for a job that it
is a good fit for her, and this process takes some time. During this time, the individual is
considered to be unemployed, but unemployment due to frictional unemployment is usually
thought to last only short periods of time and not be specifically problematic from an economic
standpoint. This is particularly true now
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that technology is helping both workers and companies make the job search process more
efficient.
Frictional unemployment can also occur when students move into the work force for the first
time, when an individual moves to a new city and needs to find work, and when women re-enter
the work force after having children. (Note in the last case, however, that maternity leave
doesn't count as unemployment!)
Cyclical Unemployment: It's probably not surprising that unemployment is higher during
recessions and depressions and lower during periods of high economic growth. Because of this,
economists have coined the termcyclical unemployment to describe the unemployment associated
with business cycles occurring in the economy. Cyclical unemployment occurs during recessions
because, when demand for goods and services in an economy falls, some companies respond by
cutting production and laying off workers rather than by reducing wages and prices. (Wages and
prices of this sort are referred to as "sticky.") When this happens, there are more workers in an
economy than there are available jobs, and unemployment must result.
As an economy recovers from a recession or depression, cyclical unemployment tends to

naturally disappear. As a result, economists usually focus on addressing the root causes of the
economic downturns themselves rather than think directly about how to correct cyclical
unemployment in and of itself.
Structural Unemployment: There are a couple of ways to think about structural

unemployment. One way is that structural unemployment occurs because some labor markets
have more workers than there are jobs available, and for some reason wages don't decrease to
bring the markets into equilibrium. (This could be because efficiency wages are being paid in an
industry, for example.) Another way to think about structural unemployment is that structural
unemployment results when workers possess skills that aren't in high demand in the marketplace
and lack skills that are in high demand. In other words, structural unemployment results when
there is a mismatch with workers' skills and employers' needs. Structural unemployment is
thought to be a pretty significant problem, mainly because structural unemployment tends to be
largely of the long-term variety and retraining workers is not a cheap or easy task.
Seasonal unemployment is, not surprisingly, unemployment that occurs because the demand
for some workers varies widely over the course of the year. (Pool lifeguards, for example,
probably experience a decent amount of seasonal unemployment.) Seasonal unemployment can
be thought of as a form of structural unemployment, mainly because the skills of the seasonal
employees are not needed in certain labor markets for at least some part of the year. That said,
seasonal unemployment is viewed as less problematic than regular structural unemployment,
mainly because the demand for seasonal skills hasn't gone away forever and resurfaces in a
fairly predictable pattern.
ACTIVITY: Google INE, IDESCAT and EUROSTAT and write a report showing the
differences in unemployment trends between Catalonia, Spain and Europe.
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4th ESO - 2017-2018
4. Inflation
Inflation is an upward movement in the average level of prices. Its opposite is deflation, a
downward movement in the average level of prices. The boundary between inflation and
deflation is price stability.
Inflation measured by consumer price index (CPI) is defined as the change in the prices of a
basket of goods and services that are typically purchased by specific groups of households.
Inflation is measured in terms of the annual growth rate and in index, 2010 base year with a
breakdown for food, energy and total excluding food and energy. Inflation measures the erosion
of living standards. A consumer price index is estimated as a series of summary measures of the
period-to-period proportional change in the prices of a fixed set of consumer goods and services
of constant quantity and characteristics, acquired, used or paid for by the reference population.
Each summary measure is constructed as a weighted average of a large number of elementary
aggregate indices. Each of the elementary aggregate indices is estimated using a sample of
prices for a defined set of goods and services obtained in, or by residents of, a specific region
from a given set of outlets or other sources of consumption goods and services.
Inflation occurs due to an imbalance between demand and supply of money, changes in
production and distribution cost or increase in taxes on products. When economy experiences
inflation, i.e. when the price level of goods and services rises, the value of currency reduces.
This means now each unit of currency buys fewer goods and services.
It has its worst impact on consumers. High prices of day-to-day goods make it difficult for
consumers to afford even the basic commodities in life. This leaves them with no choice but to
ask for higher incomes. Hence the government tries to keep inflation under control.
Contrary to its negative effects, a moderate level of inflation characterizes a good economy. An
inflation rate of 2 or 3% is beneficial for an economy as it encourages people to buy more and
borrow more, because during times of lower inflation, the level of interest rate also remains low.
Hence the government as well as the central bank always strive to achieve a limited level of
inflation.
PROJECT: Prepare an economic profile about different countries around the world. Choose one of the following countrie
Look for information about GDP, unemployment, economic sectors, inflation, debts, etc. and compare the country you c

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ENTREPRENEURSHIP AND ECONOMICS

4th ESO - 2017-2018

UNIT 1: Food and beverage businesses

The contents for this unit are:

Strengths: characteristics of the

Weaknesses: characteristics of the

Opportunities: elements in the

Threats: elements in the environment

 In May 2003 a cow with Bovine spongiform encephalopathy, more commonly

ACTIVITY: BUSINESS CASE: COCACOLA

EVOLUTION OF THE COCA-COLA BOTTLE

1. Complete the following sentences with a correct answer

 Cocacola produces beverages since...

ACTIVITY: Prepare a list with the main characteristics of franchising as a distribution

General description: History, founders, general overview, etc. SWOT

The contents for this unit are:

Modern Times Google Company

Would you like to work for Google Company? Why?

Modern companies select their employees using a wide range of selection

VideoCV :A video cv is a short video created by a candidate for employment and

ACTIVITY: Now try to answer these questions:

What kind of work are you interested in:

You were suddenly made redundant.

You received a promotion. You

were given an increment. You

worked unsociable hours. You

had a steady job.

You had adverse working conditions.

You suddenly found yourself unemployed.

office where you work has sick building syndrome. You

receive regular perks as part of your job.

Somebody called you a workaholic.

Your company doesn’t give you many incentives.

Your work didn’t offer much job satisfaction.

Your company has a generous incentive scheme.

receive support from a union.

You were under stress.

You were forced to resign.

You received a cut in your salary.

You found your job very demanding.

Music and atrezzo

UNIT 3: Steve Jobs and Apple

The contents for this unit are:

Psychologists pointed that high achievers/entrepreneurs posses these traits:

Other characteristics of entrepreneurs include:

ACTIVITY 1: Identify 5 enterpreneurs and explain something about their ideas.

The Hard Times at Apple

Iterative Customer Involvement

ACTIVITY: Watch Steve Jobs film and complete the activities:

1.Prepare a SWOT analysis about Apple.

Characteristics Apple (iOS) Android

UNIT 4: Energy and economy

The contents for this unit are:

The word inventory refers to the amount of

ACTIVITY: Answer the following questions

1. Give definition to the word ‘business’.

2. What is the difference between for-profit and non-profit organizations?

6. Define such business operation as finance.

7. What does the HRM involve?

ACTIVITY: Watch the following videos about BP coorporation

BP Coorporation // BP Energy Outlook

“BP’s reputation has fallen down recently”. Explain the sentence.

TYPE OF ADVANTAGES DISADVANTAGES