CPA Review BEC - Becker B2.txt

• Economic Lowpoint
• Unused Productive Capacity
• Unwillingness to Risk New Investments

Potential output exceeds actual output

Decrease

Increase

GDP : P

GDP : P

GDP : P

GDP : P

AD - Favorable

AD - Adverse

AD - Favorable

AD - Adverse

AD - Favorable

AD - Adverse

SRAS - Adverse

SRAS - Favorable

Fluctuations in the level of economic activity relative to a long-term growth trend

• Highest Point of Economic Activity
• Firms face Capacity Constraints & Labor Shortages
• Upward Pressure put on Overall Price Level

Measures standard of living across countries or time

Unions, Temporary Layoffs, Timing Delay in Job Matching

Jobs Available do not equal Skilled Workers

Jobs are Seasonal

Results from Recessions

• Government Expenditures +
• Investments (Private Domestic) +
• Consumption Expenditures +
• Exports (Net of Imports)

• Recession characterized by:
• -Falling Output
• -Rising Unemployment
• -Rising Price Level

World Trade Growth as a % of GDP

• Increased Transportation
• Technilogical Advancements
• Deregulation of International Financial Markets

Consists of value-added limits on the percentage of labor or materials on imported products

Participation of nations in world trade institutions

All members of global community share planet

• 1. Pure Competition
• 2. Monopolistic Competition
• 3. Oligopoly
• 4. Monopoly

• Many Small Firms
• No Entry Barriers
• No Poduct Differentiation
• Elastic
• Control Over Quantity Only
• High Price Competition
• P = MR = MC
• No Long Run Profitability

• Many Small Firms
• Low Barriers to Entry
• Low Product Differentiation
• Elastic (DC - Downward)
• Control Over Quantity Only
• Short-Run Price Competition
• P > MR = MC
• No Long Run Profitability

• Few Large Firms
• High Barriers to Entry
• High Product Differentiation
• Inelastic (DC-Downward-Kinked)
• Control Over Quantity & Price
• No Price Competition
• P > MR = MC
• Long Run Profitability

• One Large Firm
• Entry Not Possible
• No Differentiation
• Inelastic (DC-Downward)
• Control Over Quantity & Price
• Optimum Price
• P > MR = MC
• Long Run Profitability

• 1. Define Vision & Mission Statement
• 2. Set Goals
• 3. Define Objectives
• 4. Determine Baseline Measurement
• 5. Strategic Analysis (SWOT)
• 6. Create Strategic Plan
• 7. Implement Strategic Plan
• 8. Evaluate Strategic Plan

Sensitivity of demand or supply in relation to change in price

• Adverse Relationship to Demand & Supply
• Adverse Relationship to Total Revenue

• Adverse Relationship to Demand & Supply
• No Effect on Total Revenue

• No Relationship to Demand & Supply
• Favorable Relationship to Total Revenue

• Maximum Price Set Above Equalibrium Price
• Causes Shortages
• Increased Demand

• Minimum Price Set Above Equlibrium Price
• Causes Surplus
• Decreases Demand

Complete life cycle from suppliers to recycling

• Primary Activities
• Support Activities

• Purchasing
• R & D
• Employee Management
• Accounting & Finance
• Strategic Planning

• 1. Internal Cost Anlysis
• 2. Internal Differentiation Analysis
• 3. Vertical Analysis

• 1. Industry Structure Analysis
• 2. Core Competencies
• 3. Segmentation Analysis

• 1. Product of Differentiation
• 2. Cost Leadership

• Plan - Economic Eval
• Source - Procurement
• Make - Primary Function
• Deliver - Support Function

• 1. Fundamentals
• 2. Cross Functional Teams
• 3. Integrated Enterprise
• 4. Extended Supply Chain
• 5. Supply Chain Communities

• P Changes 1st - P v. D = Adverse
• D Changes 1st - D v. P = Favorable

• P Changes 1st - P v. S = Favorable
• S Changes 1st - S v. P = Adverse

%ChQ / %ChP

• 1. Labor Specialization
• 2. By-Products
• 3. Capital Equipment Usage
• 4. Volume Discounting

Anticipating greater return for greater risk

Investor's certainty equivalent is greater than the expected value of an investment alternative

Cannot be eliminated through portfolio diversification