Romania Clasa a XII-a Applied Economics
Chapters: 2
1. Households
Household economics · Saving, borrowing and insurance
- Family Budget: Household Income, Spending and Saving – A household is a group of people who live together and share income and spending. It has needs (food, housing, clothes, health, education) and wants (things that are nice but not necessary). Its income comes from work (wages, salary), from running a business, from property (rent, interest, dividends) and from transfers (pensions, grants, gifts). A family budget is a plan that lists expected income and spending for a period, usually a month. Spending can be fixed (rent, fees, loan instalments) or variable (food, electricity, travel). If income is more than spending the budget has a surplus, if equal it is balanced, and if less it has a deficit. Because money is limited, every choice has an opportunity cost: the next best thing you give up.
2. The entrepreneur and the firm
Starting and running a firm · Financial resources · Material and human resources · Running the plan
- Business Plan: How to Plan a New Business – A business plan is a written document that says what a business will do, who its customers are, how it will reach them, who will run it and how the money will work. Owners use it to think clearly, to spot risks early and to persuade banks or investors to lend or invest. A typical plan has these parts: executive summary, business idea and aims, market research (customers), competitors, marketing (the 4 Ps), operations and team, and a finance section. The finance section uses a few simple sums. Fixed costs stay the same whatever you sell (rent). Variable costs rise with each unit (ingredients). Total cost = fixed + variable. Revenue = price × units sold. Profit = revenue − total cost (a negative answer is a loss). The break-even point is the number of units where revenue equals total cost: fixed costs ÷ (price − variable cost per unit). A plan is a guess about the future, so it should be checked and updated often.
- Money and Credit – Money is a medium of exchange that removes the need for a double coincidence of wants. Banks take deposits and give loans. Credit can help people grow, or trap them in debt, depending on its terms. Formal loans from banks and cooperatives are cheaper and regulated; informal loans from moneylenders are costly. Self-Help Groups bring cheap credit to poor women.
- Nature and Significance of Management – Management means getting work done with and through people so that goals are reached on time (effectiveness) and at low cost (efficiency). It has organisational, social and personal objectives. It is partly a science, fully an art and not yet a full profession. It works at three levels (top, middle, lower) through five functions (planning, organising, staffing, directing, controlling), and coordination joins them all.
- Business Economics: How a Firm Thinks About Money – Business economics looks at a problem the way a manager of a firm does. A firm uses inputs (labour, capital, raw materials, the entrepreneur's ideas) to make output. Costs are fixed (rent, same every month) or variable (change with output). Revenue = price × quantity. Profit = revenue − total cost. Productivity = output ÷ input, for example glasses per hour. The break-even quantity = fixed cost ÷ (price − variable cost per unit). Every decision also touches stakeholders: customers, workers, owners, suppliers, lenders, government and the local community, and they may want different things.