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Monday, 4 May 2009

What are the secrets of success? The advice of business leaders

Out of the bevy of reality television shows today, no TV show affects the business minds and goals of entrepreneurs everywhere more than “The Apprentice”. The show stars Donald Trump, the famous, wealthy real estate and business icon that has become a household name. Donald Trump has been in business for several decades and knows the secrets to becoming a highly successful businessman.

In the past, public indications of his success were mainly found on buildings in New York City such as Trump Towers. He has been a major player in New York City and in the business world for the past few decades. However, the general public didn’t always have intimate access to his world like they do now through “The Apprentice” television show. On the show he interviews several candidates for a highly coveted position in his company. The candidates work on various tasks over several weeks. They rely on their education and experience to help them succeed.

The candidates and any business professional would benefit from learning the secrets of Donald Trump’s success. You might not have the opportunity to be on the show, but you can listen your way to success instead. Invest in your future by listening to Trump: How to Get Rich by Donald J. Trump. Donald Trump provides valuable insights on how to become a champion in business and reap financial rewards previously unimaginable. He covers a wide range of topics from investing to hiring the best employees.

Donald Trump is not the only business guru dispensing advice and anecdotes about his personal success. Steve Jobs revitalized Apple and returned it to dominance among technology companies. Jack Welch brought General Electric to new levels of success through innovative and unique business methods. Experience their business journeys by listening to The Second Coming of Steve Jobs by Alan Deutschman and Jack: Straight from the Gut by Jack Welch.

Interested in a business success story rifled with scandal? Listening to The Rockefellers by Peter Collier will suit your fancy. The Rockefeller family created a dynasty that built a mountain of wealth, but also evoked family of problems. Learn the affects of success that were both beneficial and detrimental to the Rockefellers.

Want to hear about other entrepreneurs? Check out the Venture Voice Podcast by Gregory Galant or the InfoTalk podcast from Podtech.net. Take an inside look at how to start a business, where technology is headed and other entrepreneurial issues.

Pop in these audio books on your car drive or train commute to work. Listen while you are working on paperwork at home or exercising in the gym. Take the time to become business savvy and learn from the pros. You’ll be glad you did as your bank account swells and your business takes off.

Types of stocks and bonds


There are many types of shares in the stock market, such as (ordinary shares, and free, and excellent, and the shares, and restricted and unrestricted), and can distinguish between all these

species in the stock market as follows:


- Ordinary shares:
the title is a right of ownership of the company, and give the bearer the right to attend the annual General Assembly of the company, access to distribution if the company achieved a profit.
- Bonus shares:
which is distributed to shareholders by having the ordinary shares, and shareholders are free to increase as the company's capital, and generated by the holding parts of the company's profits; and therefore the shareholders have the right to this increase in capital.
- Preference shares:
which gives the owner additional rights not enjoyed by the ordinary shares, such as that the owner receives the primacy of shareholders to have access to the regular portion of the profits of the company, and the owner has priority in access to rights upon liquidation of the company by a shareholder regular, and after the bond holders.
- Treasury shares:
Shares which are the company to re-purchase from the market through the Stock Exchange, the shares are not entitled to distributions or voting rights during the period of its ownership of the company.
- Restricted stock:
the words and registry for the registration and classification of the stock on the stock market, whether local or global, in particular through the actions of the registry, so as to give the Stock Exchange with the rights of the rights of this restriction.
- Unquoted shares:
it is the non-registered stock exchange, whether local or global stock markets.
- Coupon stock: which is the return on the stock, and this is a profit earned by the share of investment in the company.
On the contrary, this is not a large number of many types of bonds, and we must here distinguish between bonds issued by private sector companies, government bonds; where I serve as a loan guaranteed by the investment company's financial position, and the second loan is aimed at public spending and its government.

- Bonds issued by the business:
The bonds issued by the business as a contract or agreement between the business (the borrower) and the investor (lender). Under this agreement lends a certain amount of the second party to the First Party, which vows to turn out of the cold and benefits agreed upon in specific dates. May involve other terms of the contract for the benefit of the lender, such as certain fixed assets subject to a guarantee of payment or place restrictions on the issuance of other bonds at a later date. It may also include contract terms for the borrower, such as the right to call bonds before the maturity date.

Government bonds:

Means of debt instruments, government bonds of medium-and long-term issued by the Government in order to obtain additional resources to cover the shortfall in its budget or to meet inflation.
And consider the investor to the securities issued by the Government to be more attractive; It usually has a return of tax exemption, which is rarely achieved with other financial papers. In addition, diminishing the risk of stopping the risk of payment or to postpone it. The central government can increase its financial resources to meet the debt service by issuing more banknotes or by imposing new taxes, if forced to do so.

Typically, the papers are published in the State of information on these securities, such as the date of maturity, coupon rate, and the change in purchase price than in the previous day, and the revenue that can be achieved by the investor.

Public Relations



The aim of the establishment of this administration is to create an effective channel of communication, as well as the development of information on the work of all participants in this area. This may include the exchange of information between the representatives of companies and chambers of commerce and trade missions and business of the international community and among local businessmen.

In addition, the establishment of the Department aims to create and also the distribution of studies, which means business and newspapers and periodicals and other means of communication.

And public relations department is divided into three main sections which represent the various activities and in the following manner:

(A) Department of International Relations.

(B) Section conferences and symposia.

(V) Department of internal relations.

Department of Communications Management

The Department of Communications of the most important sections of the administrative organization is the liaison between all departments and is the backbone, which is indispensable when there is work and everywhere.

Where they play a key role in controlling the effective and correspondence received and issued from the organization, as well as the proper functioning and regularity of employment and advancement, in line with the recent development and interest in order to maintain the confidentiality of work.

The Department is also to receive correspondence from all parts of the organization, and printing and delivery, as well as send and receive facsimile and telex messages and received by the organization.

And the Department is using the latest systems in the stimulation and retrieval, and with all those who tried to deal with government departments, and arbitration cases, embassies both at home and abroad, companies and individuals Badakhl and abroad, the Arab Chambers of foreign bodies, commercial banks ... Etc.


definition Management

concept of Management.
Management concept can be approached from two sides: a matter of administration and management science.

  • Management as a preocess.
Management is effective and efficient utilization of human resources, material and financial, information, ideas and time through the administrative processes of planning, organization, direction and oversight in order to achieve goals.

This resource is intended to:
1. Human resources: people who work in the organization.
2. Material resources: all that exists in the organization of the buildings, machinery and equipment ..
3. Financial resources: All amounts of money to be used for the conduct of ongoing and long-term investment.
4. Information and ideas: facts and figures, laws and regulations.
5. Time: the time available to complete the work.
6. It is intended to administrative operations:
7. Planning, organization and Altogerwalrkabp will be addressed later.

Effectiveness:
They are intended for the achievement of the objectives of the Organization

Efficiency:
They are intended for economic use of resources: the economy in the use of resources and good use of them, and the figure below shows the relationship of resources and the administrative process and objectives to each .

  • Management as a science
Is the branch of social science which describes and analyzes and explains the phenomena and forecast management, and human behavior, which is taking place in different organizations to achieve certain objectives.

2 - Management skills
Require any director to have the following skills:

A - Conceptual Skills
Vision, such as the universality of the organization as a whole, parts of the topic and link to each other ... and so on.
This skill is required in more senior management.

B - Human Skills
In short, the ability and means to deal with others, which is equally required in all administrative levels.

C-Technical Skills
Kakedzab language skills and accounting, and computer use are required more in the lower administrative levels.

Is management science or art?

The art of management that has to be that of the Director has the ability to apply personal thoughts and theories, and intelligent management principles and tactful way reflect the experience and the experience and practice.
And management science, because we are studying in universities, the theories, principles and ideas of management and thus can be said that management is the art and science at the same time.

  • Management Fields:

There are several areas where management are applied, is applied in the public sector and so in this case, public administration and applied in the economic sector and in this case called business.

A Department of a hospital called the Department of Administration to be applied in hospitals, the Department called the hotel management which is applied in the hotels.
Thus, we note that the Department acquire the domain name in which they are applied.

If applied in the designated ministries and public administration, and if applied in the economic activities of the Department called the ... etc., and the division of administration to public administration and management of the work of one of the most important divisions, and thus try to clarify the most important differences between them in the following table:
Business Administration General Administration
Make a profit objective to provide a public service
The youngest is usually large
Economic sector and in particular the private sector and government departments such as Ministry of the area of interest or application
Board of Directors of the State policy framework
Individuals, companies, people, money, Ministry of companies, the interest, the Foundation, the form of organization
Shareholders represented in the State of its regulatory Aljhpalrkabip
Maximize the profit on the availability of the service measure of success
Here it must be pointed out that the fur of these peoples have begun to shrink and disappear.
5 - relationship with other management science:
Relationship management than the science of the most important:
- The economy.
- Psychology.
- Sociology.
- Knowledge of mathematics.
- The science of law
- Politics.
Sciences - the other.

Definition of Insurance

The term insurance can be defined in both financial and legal terms , the financial definition focuses on an arrangement that redistributes the cost unexpected losses that is , the collection of a small premium payment from all exposed and distributed to those suffering loss .

The legal definition focus on a contractual arrangement whereby on party agrees to compensate another party for losses .

The financial definition provides for the funding of the losses whereby the legal definition provides for the legally enforceable contract that spells out the legal rights , duties and obligations of all the parties the the contract .

Let’s have a look at these definitions.

In financial sense :

Insurance is a social device in which a group of individuals transfer risk on another party ( insurer) in order to combine loss experience , which permitted statistical prediction of losses and provides for payment of losses from funds contributed ( premiums) by all members who transferred risk

Bu legal sense :

A contract of insurance is a contract by which on party is consideration of the price paid to him proportionate to the risk providers security to other party that hi shall not suffer loss, damage or prejudice by the happening of certain specified events .

Insurance is meant to protect the insured against uncertain event which may cause disadvantage to him .

Life insurance however is a distinctive type insurance where there is certainty of the payment of a specified amount either on the death of the insured or an maturity of the police whichever is earlier .

Saturday, 2 May 2009

definition Risk

people express risk in different ways . To some , it' the chance or possibility of loss to others , it's may uncertain situations or deviations or what statisticians call dispersions from the expectations different authors on the subject have defined risk differently however , in most

Of the terminology the term risk includes exposure to adverse situations .

The indeterminateness of outcomes is one of the basic criteria to define a risk situation also when the outcomes is indeterminate , there is possibility

That some of them may be adverse and therefore need special emphasis .

Let’s have a look at the popular definitions of risk :

According to the dictionary , risk refers to the possibility that something unpleasant or dangerous might happen .

Risk is a condition in which where is a possibility of an adverse deviations from a desired outcome that is expected or hoped for .

At its most general level , risk is used to describe any situation where there is uncertainty about that outcome will occur .

The degree of risk refers to like hood of occurrence of an event , it’s a measure of accuracy with which the outcome of chance event can be predicted .

In most of the risky situations tow elements are commonly found :

1- The outcomes is uncertain there is a possibility that one or other(s) may occur , therefore logically there are at least two possible outcomes for gives situation .

2- Out of the possible outcomes , one is unfavorable or not liked by the individual or the analyst .

TEN PRINCIPLES OF ECONOMICS {part 2} (5-10)

PRINCIPLE #5: TRADE CAN MAKE EVERYONE BETTER OFF

You have probably heard on the news that the Japanese are our competitors in the
world economy. In some ways, this is true, for American and Japanese firms do
produce many of the same goods. Ford and Toyota compete for the same customers in the market for automobiles. Compaq and Toshiba compete for the same customers in the market for personal computers.
Yet it is easy to be misled when thinking about competition among countries.
Trade between the United States and Japan is not like a sports contest, where one side wins and the other side loses. In fact, the opposite is true: Trade between two
countries can make each country better off.
To see why, consider how trade affects your family. When a member of your
family looks for a job, he or she competes against members of other families who
are looking for jobs. Families also compete against one another when they go
shopping, because each family wants to buy the best goods at the lowest prices. So,
in a sense, each family in the economy is competing with all other families.
Despite this competition, your family would not be better off isolating itself
from all other families. If it did, your family would need to grow its own food,
make its own clothes, and build its own home. Clearly, your family gains much
from its ability to trade with others. Trade allows each person to specialize in the
activities he or she does best, whether it is farming, sewing, or home building. By
trading with others, people can buy a greater variety of goods and services at
lower cost.
Countries as well as families benefit from the ability to trade with one another.
Trade allows countries to specialize in what they do best and to enjoy a greater variety of goods and services. The Japanese, as well as the French and the Egyptians and the Brazilians, are as much our partners in the world economy as they are our competitors.

PRINCIPLE #6: MARKETS ARE USUALLY A GOOD WAY TO ORGANIZE
ECONOMIC ACTIVITY
The collapse of communism in the Soviet Union and Eastern Europe may be the
most important change in the world during the past half century. Communist
countries worked on the premise that central planners in the government were in
the best position to guide economic activity. These planners decided what goods
and services were produced, how much was produced, and who produced and
consumed these goods and services. The theory behind central planning was that
only the government could organize economic activity in a way that promoted
economic well-being for the country as a whole.
Today, most countries that once had centrally planned economies have abandoned this system and are trying to develop market economies. In a market economy, the decisions of a central planner are replaced by the decisions of millions of firms and households. Firms decide whom to hire and what to make. Households decide which firms to work for and what to buy with their incomes. These firms and households interact in the marketplace, where prices and self-interest guide their decisions.
At first glance, the success of market economies is puzzling. After all, in a market
economy, no one is looking out for the economic well-being of society as
a whole. Free markets contain many buyers and sellers of numerous goods and
services, and all of them are interested primarily in their own well-being. Yet,
despite decentralized decisionmaking and self-interested decisionmakers, market economies have proven remarkably successful in organizing economic activity in a way that promotes overall economic well-being.
In his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations,
economist Adam Smith made the most famous observation in all of economics:
Households and firms interacting in markets act as if they are guided by an “invisiblehand” that leads them to desirable market outcomes.

One of our goals in this book is to understand how this invisible hand works itsmagic.

As you study
economics, you will learn that prices are the instrument with which the invisible hand directs economic activity. Prices reflect both the value of a good to society and the cost to society of making the good. Because households and firms look at prices when deciding what to buy and sell, they unknowingly take into account the social benefits and costs of their actions. As a result, prices guide these individual decision makers to reach outcomes that, in many cases, maximize the welfare of society as a whole.
There is an important corollary to the skill of the invisible hand in guiding economic activity: When the government prevents prices from adjusting naturally to supply and demand, it impedes the invisible hand’s ability to coordinate the millions of households and firms that make up the economy. This corollary explains why taxes adversely affect the allocation of resources: Taxes distort prices and thus the decisions of households and firms. It also explains the even greater harm caused by policies that directly control prices, such as rent control. And it explains the failure of communism. In communist countries, prices were not determined in the marketplace but were dictated by central planners. These planners lacked the information that gets reflected in prices when prices are free to respond to market forces.
Central planners failed because they tried to run the economy with one
hand tied behind their backs—the invisible hand of the marketplace.

PRINCIPLE #7: GOVERNMENTS CAN SOMETIMES IMPROVE
MARKET OUTCOMES
Although markets are usually a good way to organize economic activity, this rule
has some important exceptions. There are two broad reasons for a government to
intervene in the economy: to promote efficiency and to promote equity. That is,
most policies aim either to enlarge the economic pie or to change how the pie is
divided.
The invisible hand usually leads markets to allocate resources efficiently.
Nonetheless, for various reasons, the invisible hand sometimes does not work.
Economists use the term market failure to refer to a situation in which the market
on its own fails to allocate resources efficiently.
One possible cause of market failure is an externality. An externality is the impact
of one person’s actions on the well-being of a bystander. The classic example
of an external cost is pollution. If a chemical factory does not bear the entire cost of the smoke it emits, it will likely emit too much. Here, the government can raise
economic well-being through environmental regulation. The classic example of an
external benefit is the creation of knowledge. When a scientist makes an important discovery, he produces a valuable resource that other people can use. In this case, the government can raise economic well-being by subsidizing basic research, as in fact it does.
Another possible cause of market failure is market power. Market power
refers to the ability of a single person (or small group of people) to unduly influence market prices. For example, suppose that everyone in town needs water but there is only one well. The owner of the well has market power—in this case a
monopoly—over the sale of water. The well owner is not subject to the rigorous
competition with which the invisible hand normally keeps self-interest in check.
You will learn that, in this case, regulating the price that the monopolist charges
can potentially enhance economic efficiency.
The invisible hand is even less able to ensure that economic prosperity is distributed fairly.
Amarket economy rewards people according to their ability to produce

things that other people are willing to pay for. The world’s best basketball
player earns more than the world’s best chess player simply because people are
willing to pay more to watch basketball than chess. The invisible hand does not ensure that everyone has sufficient food, decent clothing, and adequate health care.
A goal of many public policies, such as the income tax and the welfare system, is
to achieve a more equitable distribution of economic well-being.
To say that the government can improve on markets outcomes at times does
not mean that it always will. Public policy is made not by angels but by a political
process that is far from perfect. Sometimes policies are designed simply to reward
the politically powerful. Sometimes they are made by well-intentioned leaders
who are not fully informed. One goal of the study of economics is to help you
judge when a government policy is justifiable to promote efficiency or equity and
when it is not.

PRINCIPLE #8: A COUNTRY’S STANDARD OF LIVING DEPENDS
ON ITS ABILITY TO PRODUCE GOODS AND SERVICES
The differences in living standards around the world are staggering. In 1997 the
average American had an income of about $29,000. In the same year, the average
Mexican earned $8,000, and the average Nigerian earned $900. Not surprisingly,
this large variation in average income is reflected in various measures of the quality of life. Citizens of high-income countries have more TV sets, more cars, better nutrition, better health care, and longer life expectancy than citizens of low-income countries.
Changes in living standards over time are also large. In the United States,
incomes have historically grown about 2 percent per year (after adjusting for
changes in the cost of living). At this rate, average income doubles every 35 years.
Over the past century, average income has risen about eightfold.
What explains these large differences in living standards among countries and
over time? The answer is surprisingly simple.
Almost all variation in living standards
is attributable to differences in countries’ productivity—that is, the amount of goods and services produced from each hour of a worker’s time. In nations where workers can produce a large quantity of goods and services per unit of time, most people enjoy a high standard of living; in nations where workers are less productive, most people must endure a more meager existence. Similarly, the growth rate of a nation’s productivity determines the growth rate of its average income. The fundamental relationship between productivity and living standards is simple, but its implications are far-reaching. If productivity is the primary determinant of living standards, other explanations must be of secondary importance.
For example, it might be tempting to credit labor unions or minimum-wage laws
for the rise in living standards of American workers over the past century. Yet the
real hero of American workers is their rising productivity. As another example,
some commentators have claimed that increased competition from Japan and
other countries explains the slow growth in U.S. incomes over the past 30 years.
Yet the real villain is not competition from abroad but flagging productivity
growth in the United States.
The relationship between productivity and living standards also has profound
implications for public policy. When thinking about how any policy will affect living standards, the key question is how it will affect our ability to produce goods
and services. To boost living standards, policymakers need to raise productivity by ensuring that workers are well educated, have the tools needed to produce goods and services, and have access to the best available technology.
In the 1980s and 1990s, for example, much debate in the United States centered
on the government’s budget deficit—the excess of government spending over government revenue. As we will see, concern over the budget deficit was based
largely on its adverse impact on productivity. When the government needs to
finance a budget deficit, it does so by borrowing in financial markets, much as a
student might borrow to finance a college education or a firm might borrow to
finance a new factory. As the government borrows to finance its deficit, therefore,
it reduces the quantity of funds available for other borrowers. The budget deficit
thereby reduces investment both in human capital (the student’s education) and
physical capital (the firm’s factory). Because lower investment today means lower
productivity in the future, government budget deficits are generally thought to depress growth in living standards.

PRINCIPLE #9: PRICES RISE WHEN THE GOVERNMENT PRINTS TOO
MUCH MONEY
In Germany in January 1921, a daily newspaper cost 0.30 marks. Less than two
years later, in November 1922, the same newspaper cost 70,000,000 marks. All
other prices in the economy rose by similar amounts. This episode is one of history’s most spectacular examples of inflation, an increase in the overall level of
prices in the economy.
Although the United States has never experienced inflation even close to that
in Germany in the 1920s, inflation has at times been an economic problem. During
the 1970s, for instance, the overall level of prices more than doubled, and President Gerald Ford called inflation “public enemy number one.” By contrast, inflation in the 1990s was about 3 percent per year; at this rate it would take more than 20 years for prices to double. Because high inflation imposes various costs on society, keeping inflation at a low level is a goal of economic policymakers around the world.
What causes inflation? In almost all cases of large or persistent inflation, the
culprit turns out to be the same—growth in the quantity of money. When a government creates large quantities of the nation’s money, the value of the money
falls. In Germany in the early 1920s, when prices were on average tripling every
month, the quantity of money was also tripling every month. Although less dramatic, the economic history of the United States points to a similar conclusion: The high inflation of the 1970s was associated with rapid growth in the quantity of money, and the low inflation of the 1990s was associated with slow growth in the quantity of money.

PRINCIPLE #10: SOCIETY FACES A SHORT-RUN TRADEOFF
BETWEEN INFLATION AND UNEMPLOYMENT

If inflation is so easy to explain, why do policymakers sometimes have trouble ridding the economy of it? One reason is that reducing inflation is often thought to cause a temporary rise in unemployment. The curve that illustrates this tradeoff between inflation and unemployment is called the Phillips curve, after the economist who first examined this relationship.
The Phillips curve remains a controversial topic among economists, but most
economists today accept the idea that there is a short-run tradeoff between inflation and unemployment. This simply means that, over a period of a year or two, many economic policies push inflation and unemployment in opposite directions.
Policymakers face this tradeoff regardless of whether inflation and unemployment both start out at high levels (as they were in the early 1980s), at low levels (as they were in the late 1990s), or someplace in between.
Why do we face this short-run tradeoff? According to a common explanation,
it arises because some prices are slow to adjust. Suppose, for example, that the
government reduces the quantity of money in the economy. In the long run, the
only result of this policy change will be a fall in the overall level of prices. Yet not
all prices will adjust immediately. It may take several years before all firms issue
new catalogs, all unions make wage concessions, and all restaurants print new
menus. That is, prices are said to be sticky in the short run.
Because prices are sticky, various types of government policy have short-run
effects that differ from their long-run effects. When the government reduces the
quantity of money, for instance, it reduces the amount that people spend. Lower
spending, together with prices that are stuck too high, reduces the quantity of
goods and services that firms sell. Lower sales, in turn, cause firms to lay off workers.
Thus, the reduction in the quantity of money raises unemployment temporarily
until prices have fully adjusted to the change.
The tradeoff between inflation and unemployment is only temporary, but it
can last for several years. The Phillips curve is, therefore, crucial for understanding many developments in the economy. In particular, policymakers can exploit this tradeoff using various policy instruments.
By changing the amount that the

government spends, the amount it taxes, and the amount of money it prints,
policymakers can, in the short run, influence the combination of inflation and
unemployment that the economy experiences. Because these instruments of monetary and fiscal policy are potentially so powerful, how policymakers should
use these instruments to control the economy, if at all, is a subject of continuing
debate.

Thursday, 30 April 2009

TEN PRINCIPLES OF ECONOMICS {part 1} (1-4)

Part 1 (PRINCIPLES 1 - 4)

PRINCIPLE #1: PEOPLE FACE TRADEOFFS

The first lesson about making decisions is summarized in the adage: “There is no
such thing as a free lunch.” To get one thing that we like, we usually have to give
up another thing that we like. Making decisions requires trading off one goal
against another.
Consider a student who must decide how to allocate her most valuable resource—
her time. She can spend all of her time studying economics; she can spend
all of her time studying psychology; or she can divide her time between the two
fields. For every hour she studies one subject, she gives up an hour she could have
used studying the other. And for every hour she spends studying, she gives up an
hour that she could have spent napping, bike riding, watching TV, or working at
her part-time job for some extra spending money.

Or consider parents deciding how to spend their family income. They can buy
food, clothing, or a family vacation. Or they can save some of the family income
for retirement or the children’s college education. When they choose to spend an
extra dollar on one of these goods, they have one less dollar to spend on some
other good.
When people are grouped into societies, they face different kinds of tradeoffs.
The classic tradeoff is between “guns and butter.” The more we spend on national
defense to protect our shores from foreign aggressors (guns), the less we can spend
on consumer goods to raise our standard of living at home (butter). Also important
in modern society is the tradeoff between a clean environment and a high level of
income. Laws that require firms to reduce pollution raise the cost of producing
goods and services. Because of the higher costs, these firms end up earning smaller
profits, paying lower wages, charging higher prices, or some combination of these
three. Thus, while pollution regulations give us the benefit of a cleaner environment
and the improved health that comes with it, they have the cost of reducing
the incomes of the firms’ owners, workers, and customers.
Another tradeoff society faces is between efficiency and equity. Efficiency
means that society is getting the most it can from its scarce resources. Equity
means that the benefits of those resources are distributed fairly among society’s
members. In other words, efficiency refers to the size of the economic pie, and
equity refers to how the pie is divided. Often, when government policies are being
designed, these two goals conflict.
Consider, for instance, policies aimed at achieving a more equal distribution of
economic well-being. Some of these policies, such as the welfare system or unemployment
insurance, try to help those members of society who are most in need.
Others, such as the individual income tax, ask the financially successful to contribute
more than others to support the government. Although these policies have
the benefit of achieving greater equity, they have a cost in terms of reduced efficiency.
When the government redistributes income from the rich to the poor, it reduces
the reward for working hard; as a result, people work less and produce
fewer goods and services. In other words, when the government tries to cut the
economic pie into more equal slices, the pie gets smaller.
Recognizing that people face tradeoffs does not by itself tell us what decisions
they will or should make. A student should not abandon the study of psychology
just because doing so would increase the time available for the study of economics.
Society should not stop protecting the environment just because environmental
regulations reduce our material standard of living. The poor should not be
ignored just because helping them distorts work incentives. Nonetheless, acknowledging
life’s tradeoffs is important because people are likely to make good
decisions only if they understand the options that they have available.


PRINCIPLE #2: THE COST OF SOMETHING IS

WHAT YOU GIVE UP TO GET IT
Because people face tradeoffs, making decisions requires comparing the costs and
benefits of alternative courses of action. In many cases, however, the cost of some
action is not as obvious as it might first appear.
Consider, for example, the decision whether to go to college. The benefit is intellectual
enrichment and a lifetime of better job opportunities. But what is the
cost? To answer this question, you might be tempted to add up the money you
spend on tuition, books, room, and board. Yet this total does not truly represent
what you give up to spend a year in college.
The first problem with this answer is that it includes some things that are not
really costs of going to college. Even if you quit school, you would need a place to
sleep and food to eat. Room and board are costs of going to college only to the extent
that they are more expensive at college than elsewhere. Indeed, the cost of
room and board at your school might be less than the rent and food expenses that
you would pay living on your own. In this case, the savings on room and board
are a benefit of going to college.
The second problem with this calculation of costs is that it ignores the largest
cost of going to college—your time. When you spend a year listening to lectures,
reading textbooks, and writing papers, you cannot spend that time working at a
job. For most students, the wages given up to attend school are the largest single
cost of their education.
The opportunity cost of an item is what you give up to get that item. When
making any decision, such as whether to attend college, decisionmakers should be
aware of the opportunity costs that accompany each possible action. In fact, they
usually are. College-age athletes who can earn millions if they drop out of school
and play professional sports are well aware that their opportunity cost of college
is very high. It is not surprising that they often decide that the benefit is not worth
the cost.

PRINCIPLE #3: RATIONAL PEOPLE THINK AT THE MARGIN

Decisions in life are rarely black and white but usually involve shades of gray.
When it’s time for dinner, the decision you face is not between fasting or eating
like a pig, but whether to take that extra spoonful of mashed potatoes. When exams
roll around, your decision is not between blowing them off or studying 24
hours a day, but whether to spend an extra hour reviewing your notes instead of
watching TV. Economists use the term marginal changes to describe small incremental
adjustments to an existing plan of action. Keep in mind that “margin”
means “edge,” so marginal changes are adjustments around the edges of what you
are doing.
In many situations, people make the best decisions by thinking at the margin.
Suppose, for instance, that you asked a friend for advice about how many years to
stay in school. If he were to compare for you the lifestyle of a person with a Ph.D.
to that of a grade school dropout, you might complain that this comparison is not
helpful for your decision. You have some education already and most likely are
deciding whether to spend an extra year or two in school. To make this decision,
you need to know the additional benefits that an extra year in school would offer
(higher wages throughout life and the sheer joy of learning) and the additional
costs that you would incur (tuition and the forgone wages while you’re in school).
By comparing these marginal benefits and marginal costs, you can evaluate whether
the extra year is worthwhile.
As another example, consider an airline deciding how much to charge passengers
who fly standby. Suppose that flying a 200-seat plane across the country costs
the airline $100,000. In this case, the average cost of each seat is $100,000/200,
which is $500. One might be tempted to conclude that the airline should never
sell a ticket for less than $500. In fact, however, the airline can raise its profits by
thinking at the margin. Imagine that a plane is about to take off with ten empty
seats, and a standby passenger is waiting at the gate willing to pay $300 for a seat.
Should the airline sell it to him? Of course it should. If the plane has empty seats,
the cost of adding one more passenger is minuscule. Although the average cost of
flying a passenger is $500, the marginal cost is merely the cost of the bag of peanuts
and can of soda that the extra passenger will consume. As long as the standby passenger
pays more than the marginal cost, selling him a ticket is profitable.
As these examples show, individuals and firms can make better decisions by
thinking at the margin. A rational decisionmaker takes an action if and only if the
marginal benefit of the action exceeds the marginal cost.


PRINCIPLE #4: PEOPLE RESPOND TO INCENTIVES


Because people make decisions by comparing costs and benefits, their behavior
may change when the costs or benefits change. That is, people respond to incentives.
When the price of an apple rises, for instance, people decide to eat more
pears and fewer apples, because the cost of buying an apple is higher. At the same
time, apple orchards decide to hire more workers and harvest more apples, because
the benefit of selling an apple is also higher. As we will see, the effect of price
on the behavior of buyers and sellers in a market—in this case, the market for
apples—is crucial for understanding how the economy works.
Public policymakers should never forget about incentives, for many policies
change the costs or benefits that people face and, therefore, alter behavior. Atax on
gasoline, for instance, encourages people to drive smaller, more fuel-efficient cars.
It also encourages people to take public transportation rather than drive and to
live closer to where they work. If the tax were large enough, people would start
driving electric cars.
When policymakers fail to consider how their policies affect incentives, they
can end up with results that they did not intend. For example, consider public policy
regarding auto safety. Today all cars have seat belts, but that was not true 40
years ago. In the late 1960s, Ralph Nader’s book Unsafe at Any Speed generated
much public concern over auto safety. Congress responded with laws requiring car
companies to make various safety features, including seat belts, standard equipment
on all new cars.
How does a seat belt law affect auto safety? The direct effect is obvious. With
seat belts in all cars, more people wear seat belts, and the probability of surviving
a major auto accident rises. In this sense, seat belts save lives.
But that’s not the end of the story. To fully understand the effects of this law,
we must recognize that people change their behavior in response to the incentives
they face. The relevant behavior here is the speed and care with which drivers operate
their cars. Driving slowly and carefully is costly because it uses the driver’s
time and energy. When deciding how safely to drive, rational people compare the
marginal benefit from safer driving to the marginal cost. They drive more slowly
and carefully when the benefit of increased safety is high. This explains why people
drive more slowly and carefully when roads are icy than when roads are clear.
Now consider how a seat belt law alters the cost–benefit calculation of a rational
driver. Seat belts make accidents less costly for a driver because they reduce
the probability of injury or death. Thus, a seat belt law reduces the benefits to slow
and careful driving. People respond to seat belts as they would to an improvement
in road conditions—by faster and less careful driving. The end result of a seat belt
law, therefore, is a larger number of accidents.
How does the law affect the number of deaths from driving? Drivers who
wear their seat belts are more likely to survive any given accident, but they are also
more likely to find themselves in an accident. The net effect is ambiguous. Moreover,
the reduction in safe driving has an adverse impact on pedestrians (and on
drivers who do not wear their seat belts). They are put in jeopardy by the law because
they are more likely to find themselves in an accident but are not protected
by a seat belt. Thus, a seat belt law tends to increase the number of pedestrian
deaths.
At first, this discussion of incentives and seat belts might seem like idle speculation.
Yet, in a 1975 study, economist Sam Peltzman showed that the auto-safety
laws have, in fact, had many of these effects. According to Peltzman’s evidence,
these laws produce both fewer deaths per accident and more accidents. The net result
is little change in the number of driver deaths and an increase in the number

of pedestrian deaths.

Peltzman’s analysis of auto safety is an example of the general principle that
people respond to incentives. Many incentives that economists study are more
straightforward than those of the auto-safety laws. No one is surprised that people
drive smaller cars in Europe, where gasoline taxes are high, than in the United
States, where gasoline taxes are low. Yet, as the seat belt example shows, policies
can have effects that are not obvious in advance. When analyzing any policy, we
must consider not only the direct effects but also the indirect effects that work
through incentives. If the policy changes incentives, it will cause people to alter



to be continue >>>

Wednesday, 29 April 2009

Top 5 Uses For Promotional Mugs

Promotional mugs have long been a staple within the promotional products industry, accounting for around 6% of all promotional products spend (in 2007). Only pens, bags and clothing rank higher, highlighting just how important promotional drink ware has become. With this in mind, here are the top 5 ways in which promotional mugs can be used to enhance your brand.

Thank you gift
One of the great things about a promotional mug is that it has a high perceived value amongst recipients. Whereas most people equate a promotional pen as a 'giveaway', a mug is generally considered more of a gift. Of course, a low cost plastic mug isn't going to have the same appeal as a china mug but generally speaking a good quality ceramic mug works well as a thank you present. If you are thinking of sending a promotional mug as a gift, always make sure it is packaged and sealed properly and includes a personalised note. This will give your gift greater kudos and add that personalised touch that guarantees memorability.

Trade Show Giveaway
Walk around any trade show and the first thing you'll notice is the abundance of promotional pens. Whilst pens make a fantastic giveaway, they are sometimes so popular that it is difficult to make yours stand out from the rest. A printed mug, on the other hand, is more likely to be retained after the event and is a great way to stand out from the crowd.

Fund raising Tool
Fund raising is all about raising awareness and mugs are perfect for this purpose. Not only do they give your brand increased visibility they can also be sold on for a profit. Charity mugs are ideal for both children and adults alike and are almost always kept as souvenirs - offering increased exposure for your logo.

Internal Communications
As the saying goes, a happy employee is a productive employee. Staff motivation is therefore an important part of any business and should be treated as a key part of internal communications.

Promotional mugs are ideal for this purpose since they create a sense of belonging and are looked upon positively by most employees.

Direct Mail
Travel mugs and acrylic mugs work especially well for direct mail and offer an excellent way to put your logo in your customer's hands. Not many forms of advertising can connect with a customer in such a direct way and printed mugs offer the perfect solution. Accompanied with a well worked letter the inclusion of a promotional product can increase response rates by up to 50 percent.

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