business economis

May 13th, 2015
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Business objectives; nature of managerial decision making under uncertainty; concepts of profit; demand analysis and forecasting; cost analysis and control; competition, planning, production and production policies; pricing: theory, practices and policies; investment decision: government policies and business decision. 14. Course Outline

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BUSINESS ECONOMICS - IIIINTRODUCTIONIn the 1600 and 1700 centuries, mercantilism stressed that countries should simultaneously encourage exports and discourage imports. Although mercantilism is an old theory it echoes in modern politics and trade policies of many countries. The neoclassical economist Adam Smith, who developed the theory of absolute advantage, was the first to explain why unrestricted free trade is beneficial to a country. Smith argued that 'the invisible hand' of the market mechanism, rather than government policy, should determine what a country imports and what it exports. Two theories have been developed from Adam Smith's absolute advantage theory. The first is the English neoclassical economist David Ricardo's comparative advantage. Two Swedish economists, Eli Hecksher and Bertil Ohlin, develop the second theory.The Heckscher-Ohlin theory is preferred on theoretical grounds, but in real-world international trade pattern it turned out not to be easily transferred, referred to as the Leontief paradox. Another theory trying to explain the failure of the Hecksher-Ohlin theory of international trade was the international product life cycle IPLC theory developed by Raymond Vernon.International Product Life Cycle Theory (IPLC)The International product life cycle theory is a valuable instrument in analysing the effects of product evolution on the global scale. The IPLC generally applies to established companies in industrialised countries who expand the

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