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Lecture notes, cheat sheets
Microeconomics. Cheat sheet: briefly, the most important
Directory / Lecture notes, cheat sheets Table of contents
1. COMMODITY PRODUCTION, COMMODITY AND MONEY Commodity production is a form of social production in which products are made for exchange. Simple commodity production arises with the advent of social labor. Target commodity production - Receiving a profit. In commodity production, commodity-money relations operate, these are relations between people in the process of production and exchange of goods. Goods are the final product of the enterprise, which is subject to sale for profit. Money is a measure of the value of a particular good or service. The need for money is caused by commodity production. Commodity production involves consideration of the general causes that explain the need for money in all economic formations. The general cause of the emergence of money is the social division of labor. Commodity production is possible without money, but money cannot exist without commodity production. Private causes explain the need for money in a particular socio-economic formation. Particular reasons: 1) the direct labor of each producer is private labor. Social recognition of labor is possible only through exchange, thus: the social character of labor is hidden, i.e. money is needed to measure the costs of creating a product; 2) the heterogeneity of labor, which determines the distribution of material goods depending on the costs of a person; 3) the level of development of productive forces predetermines the distribution of material goods according to energy costs; 4) the presence of different forms of ownership of the means of production and products of labor; 5) the desire of people to consume the maximum amount of goods; 6) the existence of an international division of labor, international economic relations that require an equivalent exchange of labor products between countries. The essence of money is revealed through the forms of its manifestation: 1) money as the universal equivalent of goods. Money is a commodity of a special kind, which has intrinsic value, and value is measured through this commodity; 2) use value - the form of manifestation of the value contained in the product, which is in the relative form of value; 3) money as a form of general exchange. One of the features that characterize the essence of money is their general direct exchangeability for all other commodities. (A commodity is a product for sale, has a use value, manifested in the form of money - value). This property is manifested in all formations, but is characterized depending on the areas of application of money. In a market economy, this feature reaches its climax. Labor power becomes a commodity. The subject of sale and purchase are not only the products of labor, but also natural resources, the moral qualities of a person. In a socialist society, the scope of the use of money narrows; 4) the credit nature of money. In modern conditions, money has a credit character, which is manifested in the fact that money is issued, firstly, in the process of credit operations, and secondly, they represent state credit operations. The money is released into circulation for the needs of lending to the national economy, and not for the purpose of covering the budget deficit. 2. ESSENCE AND REASONS FOR THE ORIGIN OF COMMERCIAL PRODUCTION The essence of commodity production. Commodity production is a form of social production in which products are produced for exchange. The purpose of commodity production is to obtain monetary profit. In commodity production, commodity-money relations arise. This is the relationship between people in the process of production and exchange of goods. Some things and goods people and enterprises produce for their own needs, others are intended for exchange, sale. This distinction is important. Goods that are produced in order to be sold (exchanged) can be called a commodity. Money, on the other hand, is some kind of value that is recognized in society and for which you can purchase any product. Causes of commodity production. In the era of primitiveness, goods were exchanged for goods. Sometimes they do that today. It's called barter. But such an exchange is convenient only in certain cases. After all, often the thing you need is with someone who does not need yours. Sometimes the seller does not need any product at all, as he just wants to save money. And since ancient times, the most popular goods began to stand out, which would play the role of value, allowing you to measure the value of the rest. Skins, grain, pieces of metal, cattle played such a role. So, precious metals and copper became money, from which coins were minted later. As the volume of trade and distance grew, many difficulties arose with the transportation and protection of money. So gradually banks were born that took money for saving, and credit, when the owner lent them for a certain fee. But a measure was required in their production so that they would not depreciate and not lead to an increase in prices. Money circulation became more and more complicated: instead of cash, checks are often issued, which can be presented to the bank. So, a commodity economy is inconceivable without money in the most varied forms, the possibility of taking out a loan in order to benefit from it, and so on. What does it represent? In short, commodity production assumes that most of the various goods are produced for sale (exchange, order). And such a manufacturer acquires everything that is missing on the market, in a store, etc. Such an economy differs significantly from a subsistence economy, in which most of the necessities are produced within an economic unit. Why did the commodity economy replace the subsistence economy? First, the number of commodities has grown so much that no one can create them himself. Secondly, it became clear that those who specialize in the production of a small number of things make them faster, better, cheaper. Thirdly, people realized that within the enterprise it was necessary to divide labor, and then machines began to appear, designed for separate operations. Fourth, it is more profitable to separate production from sales, transportation, and advertising. Therefore, needs are constantly growing in society and there is a division of labor. Of course, commodity production also has its drawbacks. Many things that society needs do not find a buyer. We have to fight the trade in prohibited goods and services, such as drugs, etc. 3. VALUE, USE VALUE, THE LAW OF VALUE Product is a product of labor intended for exchange. But, in order to become a commodity, a product must have two properties: value and use-value. The ability to satisfy a social need, to be useful to people, is a use value. A person works to satisfy needs, therefore use value is an eternal category, but it also develops and changes. As use values, all commodities are different, and in order to exchange one thing for another, it is necessary that they have a common feature - they have a value. Each product has a dual character. On the one hand, it acts as a use value; on the other hand, it is the result of human labor, i.e. has value. The unity of use value and value is contradictory - this is the internal contradiction of the commodity, which consists in the fact that as use values all commodities are heterogeneous and incommensurable, as values they are homogeneous and commensurable. The same commodity cannot be used by the same person as value and use value. For the manufacturer of goods, i.e. the thing that he has produced for sale is, first of all, value - a means of exchange for another commodity, for another use-value. The buyer, on the other hand, acquires a thing not because it has a value, but because it has a use value and is capable of satisfying his needs. Consequently, although value cannot exist in a commodity without use value and vice versa, but, being in the possession of a particular person, the commodity, as it were, loses one of these properties, it is denied. This is the internal contradiction of the commodity as a unity of opposites. Law of value The essence of the law of value is that all commodities are produced and exchanged on the basis of socially necessary labor. The law of value performs the following functions. 1. Regulator of production proportions. Prices in the market depend on supply and demand. If the supply does not satisfy the demand, and the prices for this product rise, this means that its producers, selling the product at higher prices, receive large incomes. In pursuit of these incomes, other producers direct their capital into this production, which leads to a change in the proportions between individual industries and industries. When the market is saturated with goods and prices begin to fall, there will be an outflow of capital to another industry that is more profitable in this period. This process goes on all the time. 2. Differentiator of commodity producers. Since commodities are sold at cost, those producers whose individual value is higher than the social value cannot withstand competition and go bankrupt. Those who produce goods at a cost below the social cost are enriched. 3. Stimulant for the development of productive forces. A producer who has introduced an innovation that allows him to increase labor productivity produces goods with an individual cost less than the social one. And sells them at their social cost. Therefore, he receives additional profit. This happens as long as the innovation does not receive social distribution and does not lead to a decrease in the socially necessary labor costs. 4. MONEY AS A DEVELOPED FORM OF COMMODITY-MONEY RELATIONS Exchange originated in primitive society, but then it was of an accidental nature, the surplus products that sometimes arose were exchanged. Therefore, then the first arose - a simple, or random, form of value, when Xa = Yb, i.e. X product a is equal to Y product in . Commodity a expresses its value in commodity b. Commodity b serves as material for expressing the value of commodity a. Commodity a is in the relative form of value. Commodity c, through which the value of commodity a is expressed, - in terms of equivalent. The relative form of value has a qualitative and quantitative certainty. Equating goods a and b to each other suggests that they have something in common and equal. What is qualitatively common in them is that they are the results of labor and have value. But they are also equal in quantity, since an equal amount of labor has been expended on their production. Certain features are embedded in the product equivalent: 1) the use value of the equivalent commodity serves as a form of manifestation of the value of the commodity in a relative form; 2) concrete labor in a commodity equivalent becomes a form of manifestation of abstract labor; 3) private labor in commodity equivalent becomes the embodiment of social labor. Already in the simple form of value, the internal contradiction of the commodity is revealed. Commodity a appears as use-value, commodity B as value. With the development of the division of labor, exchange also develops, and the supply of goods on the markets also increases. Further development of ties between individual regions leads to the allocation of a single equivalent and the universal form of value turns into a monetary one. The latter differs from the universal one not in the material properties of the equivalent commodity, but in its social role. Gold becomes the universal equivalent (money) due to its natural properties: divisibility, homogeneity of parts, storability, portability. Thus, money arose spontaneously, as a result of the development of commodity production and forms of value. They originated from a commodity and are themselves a commodity, but a commodity of a special kind, which stands in opposition to all others as a universal equivalent. Being a commodity, money retains all its properties: it has value and use value. The value of a commodity is determined by the amount of social labor required to produce one monetary unit. The use value of money lies in the ability to perform the functions of a universal equivalent. With the development of credit relations, the emergence of credit money is associated. Bill - a written promissory note that gives its owner the right (at the end of the term) to demand a certain amount of money from the debtor. The bill is involved in the turnover and performs the function of payment. A check is a document containing an order from the bank account holder to pay the amount specified in the check to a specific person. A banknote is a bill of exchange issued to a banker. Paper money that is in circulation can be subject to inflation. Inflation is the depreciation of paper money and the reduction of their purchasing power. It occurs when the amount of money in circulation exceeds the sum of the prices of the goods produced. 5. DEMAND. LAW OF DEMAND Demand is a form of expression of need. This is a solvent need, i.e. the amount of money that buyers are able and willing to pay for the desired product. Distinguish between individual and aggregate demand. Individual demand represents the needs of the buyer, expressed in monetary terms. Aggregate demand - this is the solvent need of society as a whole, i.e. state, enterprises and population. Market demand is determined by summing the quantities demanded by each consumer at different prices. It is marked with the letter D. Thus, demand is the desire and ability of buyers to purchase goods and services at certain prices, which can be written as a formula: D = PQ where P is the price; Q - quantity of goods and services.  The graph contains seven options for the demand for a product, depending on its price. The result is seven points, each of which expresses the amount of goods that the consumer decides to buy at the corresponding price. By connecting these points, we get the demand curve or demand curve (DD). The curve has a negative downward slope to the right, which indicates an inversely proportional relationship between two variables - price and quantity demanded. Thus, the demand curve shows that, other things being equal, i.e. when other factors remain unchanged, a decrease in price leads to an increase in the quantity demanded, and vice versa. An increase in price leads to a decrease in demand. This connection is called the law of demand which states that, ceteris paribus, the quantity demanded is inversely related to changes in the unit price of a commodity. The inverse dependence of the dynamics of demand on the price level is determined by three reasons: 1) lower prices increase the number of buyers; 2) price reduction expands the purchasing power of consumers; 3) market saturation leads to a decrease in the utility of an additional unit of product (the law of diminishing marginal utility), so buyers are willing to purchase an additional unit of goods only at a lower price. So the demand curve goes down because the consumer generally prefers to buy more if the price is lower. The lower price allows buyers to purchase even more of the product and provides an opportunity for those who previously could not afford to purchase the product. Having found out the nature of the regularity, it is necessary to understand factors affecting demand. They are conditionally divided into price and non-price. This is the price of a given commodity, which, as has been said, affects demand inversely. Thus, the action of the price factor leads to a change in the quantity demanded, which can be seen on the demand curve. The action of non-price factors leads to a change in demand, but is expressed by a shift in the demand curve to the right (if demand is growing) and to the left (if demand is falling). 6. OFFER. LAW OF SUPPLY Proposal - a set of goods that are on the market or can be delivered to it. The sale is carried out in the form of an offer, and the purchase is carried out in the form of a demand. This is the volume of output that producers are willing to sell to consumers at certain prices. In other words, supply is the desire and ability of sellers to supply goods and services to the market for sale depending on their price. Law of supply shows that producers want to make and sell more of their product at a high price than at a low price. For the seller, the price is an incentive and an incentive to produce and sell their goods on the market. For the consumer, prices are a deterrent, since a high price forces them to buy a smaller quantity of a product. Non-price factors affecting supply 1. The cost of resources. The prices of resources determine the cost of production. Therefore, the higher the cost, the lower the supply, and vice versa. For example, prices for raw materials and materials have decreased. 2. Technology. The use of advanced technology reduces the cost of production. At these prices for resources, production costs decrease, and consequently, supply increases. The curve shifts to the right. If there is an increase in the cost of production, then this will cause a shift in the supply curve to the left. 3. Taxes and subsidies. Increasing taxes reduces the opportunities for producers, reduces production volumes, which leads to a shift in the supply curve to the left. With tax cuts, the picture is reversed. Subsidies are state subsidies, assistance to certain producers. This contributes to the growth of production and supply, shifts the supply curve to the right. 4. Expectations. In anticipation of a rise in prices, manufacturers sometimes hold goods to create a temporary shortage of the goods and accelerate the rise in prices. 5. Competition. The more firms in the market, the greater the supply, and vice versa. Non-price factors lead to a change in supply, which is expressed in a shift in the supply curve: to the right if there is an increase in supply, and to the left if supply is reduced. Graphically it looks like this.  From the foregoing, it is clear that the factors influencing the supply curve are in the plane of motivation of human activity in the economy. This once again proves that commodity producers are engaged in commercial and economic activities only for the sake of profit. If the prices for manufactured products grow, then society needs goods of this kind, "informing" producers about this by purchasing goods at a given price. If such a price level compensates for the costs of commodity producers, then this serves as an accurate criterion for the expediency of production and its compliance with demand. 7. CHANGES IN DEMAND Demand is the market demand for goods. Demand is determined by the quantity of certain goods that consumers can buy at prevailing prices and money incomes. Changes in demand depend on the following factors. 1. Consumer tastes, preferences, national characteristics. A favorable change in consumer tastes or preferences for a given product, caused by advertising or fashion changes, will mean that demand increases at every price. Unfavorable changes in consumer preferences will cause a decrease in demand Taking into account national peculiarities, it is necessary to proceed from the fact that demand changes slightly if the price of a product that is the subject of daily demand among people living in a given territory increases. For example, such a product for the Japanese or Chinese is rice, for Russians - potatoes. 2. Number of buyers. Obviously, the increase in the number of buyers in the market causes an increase in demand. Here are some examples: a sharp improvement in the means of communication has unusually expanded the boundaries of international financial markets and led to an increase in demand for shares and bonds. 3. Income. The effect on demand of changes in money income is somewhat more complex. For most goods, an increase in income leads to an increase in demand. As incomes rise, consumers tend to buy more goods, and vice versa. Goods, the demand for which changes in direct connection with the change in money income, are called goods of the highest category, or normal goods. Goods for which demand changes in the opposite direction, i.e. increases with a decrease in income, are called goods of the lowest category. 4. Prices for related goods (interchangeable and complementary goods). Interchangeable goods are those goods (substitute goods) that can be used for the same purposes. They satisfy one need (tea and coffee, vegetable and animal oil). When the price of one commodity - a substitute - rises, the demand for it falls. At the same time, the demand for another product increases - a substitute for the first. For example, if the price of butter goes up, the demand for it goes down. At the same time, the demand for vegetable oil is growing. Complementary goods accompany each other in the process of consumption. In this case, a change in demand for one good causes a similar change in demand for another good. For example, if the demand for computers increases, then the demand for printers, scanners, and mice also grows. There are also products that are independent of each other. A change in the demand for one commodity in this case will not affect the magnitude of the demand for others. For example, drugs. 5. Market size. As a rule, the more a product is offered, the lower its price and, consequently, the greater the demand for it. 6. Expectations. Consumer expectations are associated with changes in commodity prices or with changes in income. The expectation of higher prices in the future causes the buyer to buy more goods today. If income growth is expected, then people do not save, but spend more on current needs, thereby increasing demand. 8. CHANGES TO THE OFFER The following factors influence the change in supply. 1. Technology. Improvement in technology means that the discovery of new knowledge allows more efficient production of a unit of output, i.e. with less resources. At these prices for resources, production costs will decrease and supply will increase. 2. Taxes and subsidies. Businesses treat most taxes as costs of production. Therefore, raising taxes, for example, on sales or on property increases production costs and reduces supply. Grants, on the other hand, are considered a "reverse tax". When the state subsidizes the production of a good, it actually reduces costs and increases its supply. 3. Expectations. Expectations of changes in the price of a product in the future can also affect a manufacturer's willingness to bring the product to market at the present time. However, it is difficult to draw conclusions about how expectations of, say, higher prices will affect the current supply curve of a product. Farmers may delay taking the current corn crop to the market in anticipation of a higher price for it in the future. This will cause the current offer to be shortened. Likewise, the expectation of a substantial price increase in the near future for a firm's product may reduce the current supply of that product. On the other hand, in many manufacturing industries, the expectation of higher prices can induce firms to increase production capacity and thus increase supply. 4. Number of sellers. For a given output of each firm, the greater the number of suppliers, the greater the market supply. As more firms enter the industry, the supply curve will shift to the right. The smaller the number of firms in an industry, the smaller the market supply. This means that as firms exit the industry, the supply curve will shift to the left. 5. Prices for other goods. Changes in the prices of other goods can also shift the supply curve of a product. A decrease in the price of wheat may encourage a farmer to grow and sell more corn at every possible price. Conversely, an increase in the price of wheat may force farmers to reduce production and supply of corn. A sporting goods firm may cut the supply of basketballs when the price of footballs rises. 6. Prices for resources. There is a relationship between production costs and supply. The firm's supply curve is based on production costs. The firm must charge higher prices for the extra units of output because it costs more to produce those extra units. It follows that a decrease in resource prices will reduce production costs and increase supply, i.e. will shift the supply curve to the right. Example: If prices for seeds and fertilizers are falling, the supply of corn can be expected to increase. Conversely, an increase in resource prices will increase production costs and reduce supply, i.e. will shift the supply curve to the left. Example: An increase in the price of iron ore and coke increases the cost of producing steel and reduces its supply. 9. MARKET PRICE. MARKET EQUILIBRIUM Interaction of supply and demand, their coordination is carried out on the basis of the price mechanism and competition. This interaction leads to the formation of an equilibrium price, at which the quantity demanded and the quantity supplied are balanced. On fig. on the horizontal axis we plot the quantity of goods that are produced and can be bought, and on the vertical axis - the price per piece.  Both curves intersect at the equilibrium point of supply and demand (E). Equilibrium means such a state of the market, which at a certain price is characterized by equality of supply and demand. Point E reflects the coincidence of interests of producers and consumers at a price of 4 rubles. Therefore, 4 rubles. is the equilibrium market price. It suits both the seller and the buyer. A decrease in price will cause an excess of demand over supply, and an increase in price - an excess of supply over demand. Regularity: a high price forces producers to increase the production of gingerbread, but the same price reduces the desire of consumers to purchase the offered quantity of goods. At such a price, for example, 6 rubles, only a small number of buyers can afford a purchase, and therefore only a smaller part of the manufactured goods (20 thousand pieces) will be sold. The rest of the gingerbread becomes an excess. A surplus is an excess of supply over demand. In a competitive environment, the presence of excess leads to lower prices. Sales will increase, but not for the entire stock of goods. Prices will continue to decrease, which will lead, on the one hand, to a reduction in production, and on the other hand, to a gradual increase in demand, which will eventually balance supply and demand. The main signs of shortages are the reduction of commodity stocks and the appearance of queues of buyers. Commodity stocks are those funds of goods that have already been produced and are ready for sale. Sellers usually keep a part of the goods in stock in order to quickly respond to changes in demand. When inventories decrease and fall below the planned level, sellers change their plans. They may try to replenish stocks by increasing output. Some will capitalize on increased demand by raising prices because buyers are willing to pay more when there is a shortage. Scarcity puts pressure on the price from below, and buyers will also change their plans. A movement to the left and up the demand curve will mean a decrease in consumption. As a result of changes in the plans of buyers and sellers, the market comes into equilibrium. When the price reaches the equilibrium value, the deficit will disappear. In markets where there is no stock, the sign of shortage is the line of buyers. Oversupply means an increase in inventories and the appearance of queues of entrepreneurs offering services. Thus, the equilibrium price is the price of the level at which supply meets demand. In a competitive market, the equilibrium price is at the point where the supply and demand curves intersect (point E). At this point, the quantities of goods that the consumer wants to buy and the producer wants to sell coincide. 10. PERFECT COMPETITION Perfect competition is an economic situation in which: 1) no single unit acting as a buyer or seller can influence the market price of the goods being bought or sold; 2) no artificial restriction prevents the factors of production from being transferred from one economic entity to another. The concept of perfect competition is tied to a static equilibrium model operating with predetermined prices and volumes of resources. The concept of free, unlimited competition characterized it as a process. The concept of perfect competition focused on the equilibrium state of the enterprise, industry as a result that preceded competition. This interpretation meant the evolution of the theoretical model of the market. The perfect market model is based on the fact that its main actors act in accordance with economic principles. The condition for the rational management of enterprises is the principle of economy, which has two aspects: 1) using the available funds, you should get the maximum result - benefit, income; 2) the desired result must be achieved with a minimum use of funds. Perfectly competitive markets These are markets where the following basic conditions are met: 1) the presence of many small firms (enterprises), whose share in the industry market is negligible - less than 1%; 2) sales for any period of time (atomized market); 3) the products are homogeneous. This condition is called the homogeneity of goods; 4) sellers act independently of each other; 5) buyers and sellers are well informed about the state of the entire market, especially about prices in any part of the market. This condition is called market transparency. In addition to the listed perfectly competitive markets, there are other conditions: 1) instant response of supply and demand to market signals, which should ensure the establishment of market equilibrium; 2) the existence of a spot market, where sellers and buyers meet at the same time, in the same place; 3) the absence of any costs associated with the transaction between producers and consumers. The existence of exchange offices, investment companies, dealers and other intermediaries is excluded; 4) such an instrument of competition as price cutting is excluded; 5) the absence of preferences of a spatial, personal and temporal nature is assumed. Perfectly competitive markets have the highest degree of independence in the behavior of sellers and buyers. A perfectly competitive firm - a firm that "takes the price" of its products as given, independent of the volume of products sold by it. Such a firm is called a price taker. Its competitive behavior can be characterized as adaptive. The firm adjusts costs, production volumes to the main reference point given from the outside - the market price. The market model of perfect competition is normative. In reality, perfect competition is quite rare. And only some markets approach it (the grain market, currencies, etc.). 11. CONCEPT OF THE MARKET Market is a system of economic relations that develop in the process of production, circulation and distribution of goods. The market develops along with the development of commodity production, involving in the exchange not only manufactured products, but also products that are not the result of labor (land, wild forest). The essence of the market. The market represents the sphere of exchange (circulation), in which communication is carried out between the agents of social production in the form of purchase and sale, i.e. connection of producers and consumers, production and consumption. The subjects of the market are sellers and buyers. Households (composed of one or more persons), enterprises, and the state act as sellers and buyers. Most market participants act both as buyers and sellers. Subjects interact in the market, forming an interconnected "stream" of buying and selling. The objects of the market are goods and money. Goods are manufactured products, factors of production (land, labor, capital), services. As money - all financial means. The market as an independent entity includes three main elements: the market for goods and services, the labor market, and the capital market. All these three markets are organically interconnected and influence each other. The development of the market and market relations depends on the development of all its components. Conditions for the emergence of the market: 1) social division of labor. Through the division of labor, an exchange of activities is achieved. As a result, a worker of a certain type of labor gets the opportunity to use the products of any other specific type of labor; 2) specialization. Specialization is a form of social division of labor both between different sectors and spheres of social production, and within an enterprise at various stages of the production process. In industry, there are three main forms of specialization: - subject (automobile, tractor factories); - detailed (ball bearing factory); - technological (spinning mill); 3) the limited production capabilities of man. In society, not only the production possibilities of a person are limited, but also all other factors of production (land, equipment, raw materials). Their total number has limits, and the use in any one area excludes the possibility of the same production use in another. In economic theory, this phenomenon is called the law of limited resources. Resource constraints are overcome by exchanging one product for another through the market; 4) economic isolation of commodity producers. Economic isolation means that only the manufacturer decides what products to produce, how to produce them, to whom and where to sell. The legal regime of the state of economic isolation is the regime of private property. The exchange of products of human labor primarily presupposes the existence of private property. With the development of private property, the market economy also developed. Objects of private property are diverse. They are created and multiplied through entrepreneurial activity, income from running one's own economy, income from funds invested in shares and securities. 12. FUNCTIONS AND CLASSIFICATION OF THE MARKET The market has a huge impact on all aspects of economic life, performing a number of economic functions: 1) regulatory. In market regulation, the ratio of supply and demand, which affects prices, is of great importance. The price rises - a signal to expand production, falls - a signal to reduce. In modern conditions, the economy is controlled not only by the "invisible hand", but also by state levers. However, the regulatory role of the market continues to be preserved, largely determining the balance of the economy. The market acts as a regulator of production, supply and demand. Through the mechanism of the law of value, supply and demand, he establishes the necessary reproduction proportions in the economy; 2) stimulating. Through prices, it stimulates the introduction of the achievements of scientific and technological progress into production, reducing the cost of production and improving its quality, expanding the range of goods and services; 3) informational. The market is a rich source of information, knowledge, information needed by business entities. It gives, in particular, information about the quantity, range and quality of those goods and services that are supplied to it. The availability of information allows each firm to compare its own production with changing market conditions; 4) intermediary. In a normal market economy with sufficiently developed competition, the consumer has the opportunity to choose the optimal supplier of products. At the same time, the seller is given the opportunity to choose the most suitable buyer. 5) sanitizing. It clears social production of economically weak, unviable economic units and, on the contrary, encourages the development of efficient, enterprising, promising firms. Market classification The market includes elements directly related to the provision of production, as well as elements of material and monetary circulation. It is associated with both industrial and spiritual spheres. Accordingly, the market is classified as follows: 1) according to the objects of exchange, the market for goods, the market for services, the capital market, the securities market, the labor market, the foreign exchange market, the market for information and scientific and technical developments are distinguished; 2) in the territorial context, a local (local) market is distinguished, which is limited to one or several regions of the country; the national market, which covers the entire national territory; the world market covering all countries of the world; 3) according to the mechanism of functioning, they distinguish between free (regulated on the basis of free competition of independent producers); monopolized (the conditions of production and circulation are determined by a group of monopolies, between which monopolistic competition is maintained); regulated (an important role belongs to the state, which uses economic instruments of influence) markets; 4) sometimes a planned-regulated market is also singled out. Here, the plan plays a leading role in ensuring the basic proportions of production and circulation; there is a centralized regulation of pricing, financial, credit and monetary circulation. 13. THE CONCEPT OF A MARKET ECONOMY. MARKET ECONOMY In modern conditions, the market has transformed from self-regulating to regulated. This led to the complication of the subject-object structure of the market economy. The subject-object structure of a market economy is a system of relationships between subjects that reflects their goals. Subjects of the market economy: 1) a household is an economic unit consisting of one or more persons, which: a) ensures the production and reproduction of human capital; b) independently makes decisions; c) is the owner of any factor of production; d) seeks to maximize the satisfaction of their needs; 2) an enterprise is an economic unit that: a) uses factors of production to manufacture products for the purpose of selling them; b) seeks to maximize profits; c) independently makes decisions; 3) the state - represented by government agencies exercising legal and political power to ensure control over economic entities and over the market to achieve public goals. All subjects of the market economy closely interact in the market, forming an interconnected "flow" of purchase and sale. Objects of the market economy are goods and money. Not only production products act as goods, but as factors of production (land, labor, capital) services. As money - all financial means, the most important of which are money itself. Money is the expression of the value of all goods and services. The market as an independent entity includes 3 main elements: 1) the market for goods and services; 2) labor market; 3) capital market. All these 3 markets are organically interconnected and influence each other. The development of the market of market relations depends on the development of all its components. The market assumes the presence of the following features: - an unlimited number of participants in acts of purchase and sale, free access to the market and free exit from it. This means that every person has the right to engage in business or stop it. Producers choose any kind of activity. In turn, consumers can buy anything; - mobility of material, labor, financial resources, since entrepreneurial activity aims to increase income, and this can be counted on only with the expansion of production, the development of new equipment, the introduction of new technologies, etc.; - each market entity has reliable information about supply, demand, prices, etc. Without this, he will not be able to navigate the market and make the right decision about the expediency of buying and selling; - the absence of a monopoly of the manufacturer, the homogeneity of goods of the same name, otherwise there will be no freedom of economic behavior of sellers and buyers on the market. In reality, these signs do not always exist. Therefore, in life there is a competitive market. Competition is rivalry, competitiveness in the market, the struggle between manufacturers for consumers, for the best conditions for selling their products. Competition is a market mechanism that improves product quality and reduces production costs. 14. FUNCTIONS OF TAXES Taxes as a cost category have their own distinctive features and functions that reveal their socio-economic essence and purpose. tax function - this is a manifestation of its essence in action, a way of expressing its properties. There are three main functions of taxes: 1) fiscal; 2) control; 3) distribution. These functions are interconnected and interdependent. None of them can develop to the detriment of the other. At the same time, the main function of taxes is fiscal to ensure the filling of the treasury. The fiscal function is the main one, characteristic initially for all states. With its help, state monetary funds are formed, i.e. material conditions for the functioning of the state. It is this function that provides a real opportunity to redistribute part of the value of the national income in favor of the least well-to-do social strata of society. The state, setting taxes, seeks first of all to secure the necessary material base for the implementation of the tasks assigned to it. Thus, during the formation of bourgeois society, taxes mainly had a fiscal function. However, world experience shows that the functions of taxes change as the state develops. Thanks to the control function, the effectiveness of the tax mechanism is assessed, control over the movement of financial resources is ensured, and the need to make changes to the tax system is identified. The control function of tax and financial relations is manifested only in the conditions of the distribution function. Thus, both functions in organic unity determine the effectiveness of tax and financial relations and budgetary policy. The distribution function of taxes has a number of properties that characterize the versatility of its role in the reproduction process. This is primarily the fact that initially the distribution function of taxes was purely fiscal in nature. But since the state considered it necessary to actively participate in the organization of economic life in the country, the function has a regulatory property, which is carried out through the tax mechanism. Tax Incentive Subfunction is implemented through a system of benefits, exceptions, preferences, linked to the benefit-forming features of the object of taxation. It manifests itself in changing the objects of taxation, reducing the taxable base, lowering the tax rate, etc. The law provides for the following types of benefits: 1) non-taxable minimum object of tax; 2) exemption from taxation of certain elements of the object of tax; 3) tax exemption for certain categories of payers; 4) reduction of tax rates; 5) targeted tax benefits; 6) other tax benefits. Preferences are set in the form of an investment tax credit and a targeted tax credit to finance innovation costs. A tax credit, like any credit, is provided on a repayable basis and is formalized by an agreement between the enterprise and the relevant tax authority. The sub-function of reproduction purposes includes payments for the use of natural resources, taxes levied on road funds, and on the reproduction of the mineral resource base. These taxes have a clear sectoral affiliation. 15. CONCEPT OF MONEY Money - this is a commodity that acts as a universal equivalent, reflecting the value of all other goods. Historical stages of money development: 1st stage - the appearance of money with the performance of their functions by random goods; 2nd stage - consolidation of the role of the universal equivalent for gold (this stage was the longest); 3rd stage - the stage of transition to paper or credit money; 4th stage - the gradual displacement of cash from circulation, as a result of which electronic types of payments appeared. The essence of money is manifested through: 1) universal, direct exchangeability; 2) independent exchange value; 3) an external material measure of labor. Functions of money Money has certain functions, such as: 1) a measure of value; 2) means of payment; 3) means of circulation; 4) means of accumulation (savings); 5) world money. Types of money Money in its development appeared in two forms: 1) real money - this is money in which the nominal value corresponds to their real value, i.e. the value of the metal from which they are made. Real money is characterized by stability, which was ensured by the free exchange of tokens of value for gold coins, the free minting of gold coins with a certain and unchanged gold content of the monetary unit, and the free movement of gold between countries. The appearance of signs of value in gold circulation was caused by an objective necessity: - gold mining did not keep pace with the production of goods and did not provide the full need for money; - gold money of high portability could not serve a turnover of small value; - the gold circulation did not possess economic elasticity due to objectivity, i.e. rapidly expand and contract; - the gold standard as a whole did not stimulate production and trade. Gold circulation existed in the world for a relatively short time - until the First World War, when the belligerent countries issued tokens of value to cover their expenses. And gradually gold disappeared from circulation; 2) substitutes for real money - money, the nominal value of which is higher than the real one, i.e. of the social labor spent on their production. These include: - metal signs of value; - paper signs of value. The role of money in a modern market economy Modern capitalism has led to a modification of the function of money. In today's society, all goods, services, natural resources, as well as people's ability to work, take on the form of money. The qualitatively new role of money (as opposed to money of mere commodity production) is that it is converted into money capital, or self-increasing value. Functioning in the world market, money provides the flow of capital between countries. Money serves the production and sale of social capital through a system of cash flows between the sectors of the economy, industries and regions of the country. The organizers of these cash flows are the state, business entities and, to some extent, individuals. Moreover, the turnover of the value of the social product begins and ends with the owner of the capital. 16. FUNCTIONS OF MONEY Money performs the following five functions: it is a measure of value, a means of circulation, a means of payment, a means of accumulation and savings, world money. 1. The function of money as a measure of value. Money as a universal equivalent measures the value of all goods. What makes all commodities commensurable is the socially necessary labor expended in their production. The value of a commodity expressed in money is called the price. To compare the prices of goods of different value, it is necessary to reduce them to the same scale, i.e. express them in the same currency. The scale of prices in metallic circulation is the weighted amount of money metal, accepted in a given country as a monetary unit and serving to measure the prices of all other commodities. Initially, the weight content of the monetary unit coincided with the scale of prices, which was reflected in the names of some monetary units. So, the English pound sterling really weighed a pound of silver. 2. The function of money as a medium of circulation. In direct commodity exchange (goods for goods), purchase and sale coincided in time and there was no gap between them. Commodity circulation includes two independent acts separated in time and space. The role of an intermediary that allows to bridge the gap in time and space and ensure the continuity of the production process is played by money. The features of money as a means of circulation include the real presence of money in circulation and the short duration of their participation in the exchange. In this regard, the function of circulation can be performed by defective money - paper and credit. 3. The function of money as a means of accumulation and savings. Money, providing its owner with the receipt of any product, becomes the universal embodiment of social wealth. So, people have a desire to save them. In the case of metallic circulation, this function of money served as a spontaneous regulator of money circulation: excess money went into treasures, the lack was filled from treasures. Under the conditions of expanded commodity reproduction, the accumulation (i.e., accumulation and saving) of temporarily free cash is a necessary condition for the turnover of capital. The creation of monetary reserves smooths out the unevenness and peculiarities of economic life. On a state scale, the creation of a gold reserve was required. In connection with the withdrawal of gold from circulation, the value of the gold reserve indicates the wealth of the country and ensures the confidence of residents and non-residents in the national currency. 4. The function of money as a means of payment. Money as a means of payment has a specific flow pattern (T-DO-T) not related to the oncoming movement of goods: goods - urgent promissory notes - money. 5. The function of world money. In the role of world money, it functions as a universal means of payment, a universal means of purchase, and a universal materialization of social wealth. World money was gold as a means of regulating the balance of payments and credit money of individual states, exchanged for gold: mainly the US dollar and the British pound sterling. 17. THE LAW OF CURRENCY AND INFLATION The number of banknotes required for circulation is determined by the economic law of monetary circulation. In accordance with this law, the amount of money needed at any given moment for circulation can be determined by the formula: D \uXNUMXd (C-V + P-VP) / C. O., where D - the number of monetary units needed in a given period for circulation; C - the sum of the prices of goods to be sold; B - the sum of the prices of goods, payments for which go beyond the given period; P - the sum of the prices of goods sold in previous periods, the terms of payments for which have come; VP - the amount of mutually repayable payments; S. O. - the rate of turnover of the monetary unit. In a simplified form, this formula can be represented as follows: D \uXNUMXd M x C / S. o., where M is the mass of goods sold; C - the average price of the goods; S. o. - the average turnover rate (how many times a year the ruble turns around). Transforming this formula, we obtain the exchange equation: Д X S. O. \uXNUMXd M x C, which means that the product of the quantity of money and the velocity of circulation is equal to the product of the level of money and the mass of commodities. When there are crisis phenomena in the economy, this equality is violated, money depreciates, which can be expressed in the formula: Д X S. o. > M X C. Such depreciation, or "inflation", means a fall in the price of money due to the excessive issue of banknotes, an increase in their quantity necessary for normal circulation. Inflation leads to rising prices and a redistribution of gross domestic product and wealth in favor of state monopoly enterprises and the shadow economy at the expense of maintaining real wages and other incomes of the general population. Inflation occurs in various forms and is influenced by many factors. Considering the forms of inflation in an enlarged form, two can be distinguished: obvious inflation, manifested in an open rise in prices, and hidden, indirect. The first form is visible on the surface of phenomena, and the second is the depreciation of money, when the price increase is hidden (the quality of goods decreases, new goods produced have an inflated price that does not correspond to consumer properties, wages and other payments are delayed due to lack of financial resources). The main factors causing inflation: release of surplus money supply into circulation, falling production volumes, disproportions in the development of economic sectors, budget deficit, lagging behind the production of goods from effective demand. These disproportions may increase under the influence of incorrect economic policies of enterprises, banks and the state. In Russia, during the transition to a market economy, the inflation rate is influenced by: - the state budget deficit and the increase in public debt; - excessive investment; - unreasonable increase in prices and wages; - credit expansion - the expansion of credit without taking into account its depreciation, which leads to the issue of money in various forms; - excessive issue of money in cash; - Excessive money emission, fixing the rise in prices that arose as a result of an incorrect pricing policy; - strengthening the role of external factors through the mechanism of currency convertibility, when there is an increase in prices for imported goods. 18. PARADOX OF VALUE, CONSUMER SURPLUS consumer surplus. The difference between the total utility of a good and its total market price is called consumer surplus (or consumer rent). This difference arises as a result of the law of diminishing marginal utility, because the consumer gets more than he pays. The consumer pays the same amount of money for a unit of goods, from the first to the last. For example, he pays the same price for every egg or every glass of water. In other words, the buyer pays for each unit of goods the amount at which the last unit of the goods is estimated. But due to the operation of the law of diminishing marginal utility, all previous units are valued by the consumer higher than the last. As a result, the consumer receives a surplus of utility on all previous (except the last) units of the purchased product. The consumer values the first unit of X at $7, the second at $6, the third at $5, and the fourth at $4. In reality, he will pay only $3 for each unit of X. At this price, he will buy 5 units. X. The buyer will receive consumer surplus from the purchase of the first 4 units. X for an amount equal to $10 i.e. the difference between the highest price he wanted to pay and the price he actually paid (4 + 3 + 2 + 1 = $10). The logic of obtaining consumer surplus by an individual buyer can be applied to the market as a whole. The market consumer surplus will be the sum of the consumer surpluses of all individual buyers. Market consumer surplus refers to the benefit society as a whole receives from the purchase of certain goods at market prices. The concept of consumer surplus helps to evaluate the effectiveness of the implementation of many government projects. Another remark is important to make in connection with the concept of consumer surplus. It is generally accepted that neither party in a trade transaction receives any benefit, since the act of exchange is performed on an equivalent basis. If so, then why waste time and nerves on such meaningless operations? A few centuries ago, economists came to the conclusion that in conditions of voluntary and honest exchange, trade is a mutually beneficial business for its participants. At the same time, the value side of the exchange really remains equivalent. However, each of them acquires for itself a greater overall utility in comparison with the other side. The paradox of value. The more goods, the relatively less intensity of the desire to consume his last unit. From this it is clear why, in most cases, water has a low price, and air is generally free. In both cases, a sufficient supply of these much-needed products drastically lowers their marginal utility and, consequently, their prices. The paradox of value reminds us once again that simply valuing a commodity (price x quantity) as an indicator of the overall economic value of a commodity can be very misleading. The measurement of the monetary value of air is zero, and at the same time life itself is impossible without it. 19. THEORY OF CONSUMER BEHAVIOR Theory of consumer behavior explains how buyers spend their income in order to maximize their needs. It shows how choice is influenced by product prices, income, preferences, and how buyers maximize their "net" gains from the purchase of goods and services. This theory has a wide scope of application not only in the implementation of choice in market activities. It can explain, for example, how economic considerations influence decisions to get married, have children, and allocate time between work and leisure. Consumer behavior in the market is quite difficult to understand and explain. A lot of reasons affect the tastes and preferences of a person when he buys a product or service. There are methods to predict the possible behavior of the consumer. 1. Marketing study of consumer behavior focuses on the needs and requirements of consumers. Marketing study draws on economic theory, scientific psychology and sociology. 2. System analysis. General principles and research methods are based on economic theory, explain the behavior and demand of the consumer. Within the framework of system analysis, the study of consumer behavior begins with the study of his consumer choice, the reasons why he prefers one product to another. Three versions of consumer choice are usually analyzed. These versions are connected, firstly, with the study of the concept of marginal utility, secondly, with the calculation of the income effect and the substitution effect, and thirdly, with the analysis of consumer preferences. Consumer choice in the third version - the combination of consumer preferences with budget constraints, which determines which combinations of goods consumers will choose to purchase in order to maximize satisfaction of their needs. The consumer cannot buy everything he wants if each purchase depletes his limited money income. Faced with the economic factor of scarcity, the consumer must make compromises. He must choose between alternative values in order to get the most desirable set of products at his disposal with limited financial resources. The choice that people make after they correlate their desires with the available opportunities to purchase certain goods determines how much goods will be demanded. The dependence of demand on consumer choice is obvious. Demand is a concept that connects the purchased goods with the sacrifices that have to be made to acquire these goods. That is, from the point of view of buyers' behavior, demand is the desire and ability of people to buy goods or a certain ratio of the quantities of goods that are bought and the costs of buyers - carriers of demand for the purchase of this amount of goods. Costs are usually divided into two groups: 1) monetary costs associated with the price; 2) non-monetary costs due to non-price determinants - subjective tastes and preferences, the number of buyers in the market, the average income of consumers, the price of related goods. 20. STAGES OF MARKETING RESEARCH The marketing research process includes several stages. 1. Definition of the problem and objectives of the study. It is difficult to start any research until the essence of the problem is determined. The stage of recognizing and defining the problem is the first step in the process of finding a solution. Sales failures, a growing number of unpaid invoices and low turnover are all signals or symptoms of more serious problems. Researchers need to recognize and identify the problems behind these symptoms. The wrong definition of the problem can lead to the wrong solution. The goals of marketing research follow from the formulated problems. Goals should be clearly and precisely formulated, be sufficiently detailed, it should be possible to measure them and assess the level of their achievement. 2. Definition of objects of research. Once the problem is identified, research objectives can be formulated. As a rule, research involves solving one of four tasks: develop, describe, test hypotheses, and predict. Research for the purpose of development is carried out when it is necessary to obtain more information on a given problem, to formulate hypotheses more clearly. Research for the purpose of describing problems is carried out when it is necessary to describe objects such as a market or part of it, determining their characteristics on the basis of statistical data. If the task of marketing research is to test the hypothesis of the relationship between independent and dependent variables, firms conduct research in order to identify the causes that caused the problem. 3. Development of a research plan. The creation of a research project is perhaps the most important stage in the marketing research process. A research project is a general plan for conducting marketing research. It defines the needs for various data and the procedure for collecting, processing and analyzing these data. On the part of the researcher, the development of a plan requires great ability. This stage includes not just the choice of certain methods for conducting marketing research, but the development of specific tasks within the framework of marketing research. This stage also determines the need for information, the type of information required, sources and methods of obtaining it. 4. Data collection. In terms of organizing the process, there are at least three alternative approaches to data collection: by marketing staff, by a specially created group, or by involving companies specializing in data collection. The process of collecting information is usually the most expensive stage of the research. In addition, a fairly large number of errors may occur during its implementation. 5. Analysis of data information. It starts with the transformation of the original data (introduction to the computer, checking for errors, coding, representation in matrix form). This allows you to translate a lot of raw data into meaningful information. 6. Presentation of results. The conclusions obtained as a result of the study are drawn up in the form of a final report and submitted to the company's management. 21. INFLATION OF DEMAND AND COSTS Demand inflation - This is the phenomenon of imbalance between supply and demand in the direction of demand. The reason for this shift may be: 1) increase in government orders; 2) an increase in demand for means of production in conditions of full employment and almost full utilization of production capacities; 3) the growth of the purchasing power of the population. As a result, there is an excess of money in circulation in relation to the quantity of goods, and prices rise. In a situation where there is already full employment in manufacturing, producers cannot increase the supply of goods in response to an increase in demand. Demand inflation is caused by the following monetary factors: - the state budget deficit and the growth of domestic debt. The deficit is covered by placing state loans on the money market or by issuing fiat banknotes of the central bank; - Excessive investment in heavy industry. At the same time, elements of productive capital are constantly withdrawn from the market, in exchange for which an additional monetary equivalent enters the circulation; - militarization of the economy and the growth of military spending. Military equipment is becoming less and less suitable for use in civilian industries. As a result, the money equivalent that opposes military equipment turns into a factor that is redundant for circulation; - imported inflation. This is the issue of the national currency in excess of the needs of trade when buying foreign currency by countries with an active balance of payments. cost inflation expressed in the rise in prices due to the rise in production costs. The reasons for it can be: - oligopolistic practice of pricing; - economic policy of the state; - rising prices for raw materials, etc. Cost-push inflation is characterized by the impact of the following non-monetary factors on pricing processes: - leadership in prices; - Decreased growth in labor productivity and a decline in production; - the increased importance of the service sector. It is characterized, on the one hand, by a slower growth in labor productivity compared to the branches of material production, and, on the other hand, by a large share of wages in total production costs; - accelerating the growth of costs and especially wages per unit of output The economic strength of the working class, the activity of trade union organizations do not allow large companies to reduce wage growth to the level of slow growth in labor productivity. At the same time, as a result of monopolistic pricing practices, large companies were compensated for their losses through accelerated price growth, i.e. a wage-price spiral was launched. At present, inflation is one of the most painful and dangerous processes that negatively affect finances, the monetary and economic system as a whole. Inflation means not only a decrease in the purchasing power of money, it undermines the possibilities of economic regulation, nullifies efforts to restore disturbed proportions and structural transformations. 22. THE ROLE OF THE STATE IN A MARKET ECONOMY The role of the state in a market economy manifested through its functions. The activity of the state is aimed at achieving the general goal - the good of the person, his well-being, maximum legal and social protection of the individual. Each function of the state has a subject-political description. Its content shows what is the subject of the state's activities, what means are used to achieve this or that goal. The central issue of the state is the problem of developing a strategy for the socio-economic development of the country with a clear definition of ultimate goals. The state initiates the development of such a strategy and is responsible for its direction and concrete implementation. One of the most important functions is economic stabilization и stimulation of balanced economic growth. By a system of certain measures in the field of budgetary, monetary and fiscal policy, the state is trying to overcome the crisis phenomenon and reduce inflation. To this end, it stimulates the aggregate demand for goods, investments, regulates bank interest and tax rates. In general, the state, in order to smooth out cyclical fluctuations during a period of economic recession, pursues a policy of intensifying all economic processes, and during its rise seeks to restrain business activity. Particular attention should be paid to the function of providing employment. It is known that the market economy does not provide full employment of the population. Involuntary unemployment is inevitable in it. Therefore, the state seeks to ensure full employment of the able-bodied population, regulates the labor market, for which it creates appropriate employment services, organizes new jobs, retraining and retraining of the workforce, etc. The scope of the state's activities includes price regulation. The significance of this function is great, as the dynamics and structure of prices objectively reflect the state of the economy. In turn, prices actively influence the structure of the economy, the investment process, the stability of the national currency, the social atmosphere. In this regard, the state is obliged to influence prices, using various methods of influence, to pursue a certain pricing policy. For example, in any country there are many goods and services, the prices for which are determined by the state: tariffs for rail transportation, electricity, etc. Often, the state provides price subsidies, special surcharges to producers of socially significant goods, establishes so-called limit prices, determining only their upper limits . One of the main functions of the state is to ensure the legal framework for the activities of economic entities. The state in the person of its bodies develops and adopts legislative acts regulating economic activity in the country and placing economic entities on equal terms. It defines the rights and forms of ownership, the rules of doing business, establishes the conditions for concluding and executing contracts, relationships, trade unions and employers, prevents abuses, provides consumer protection. To monitor the observance of laws, special bodies are created that take effective measures against offenders. 23. STATE REGULATION OF MARKET PROCESSES WITH THE HELP OF TAXES AND SUBSIDIES Subsidies - this is the financial support of the state of certain industries. Subsidies include benefits, financial support, loans, etc. Ways out of the recession: offers state subsidies to inefficient industries, artificial support for bankrupt enterprises, protectionist measures to protect domestic producers from foreign competition. In fact, this would mean the preservation of the old structure of the economy with its low productivity, "production to nowhere" and "unemployment at work." In reality, there is no way out of the recession on this path, financial injections into unpromising industries at the expense of taxpaying citizens are not capable of improving even formal indicators of national production for a long period. State financial support hinders the restructuring of enterprises and does not stimulate their adaptation to the market environment. The constant renewal of this support directs them to the so-called "rent-seeking" - efforts to obtain various privileges from the authorities, which weaken efforts to increase the competitiveness of products on the market, and with great compliance of the authorities, make them completely unnecessary. There is no point in wasting time and resources on improving production and updating products, when it is easier to ask for financial assistance from a bureaucrat and for some time prolong existence at the expense of others. Thus, we can say that: 1) benefits for producers are a penalty for taxpayers; 2) benefits are pushing towards the search for new benefits, rather than improving production; 3) benefits hinder the market restructuring of enterprises, do not overcome, but exacerbate the recession. On the other hand, if the authorities do not distribute privileges, then there is nothing left for enterprises to do but seek and find internal reserves for survival in the competitive struggle for the sale of products. As a result, they either drastically improve the quality of their products or change their profile. Taxes - these are any types of obligatory payments to the state and its institutions. Taxes are given an important place among the economic levers by which the state influences the market economy. The application of taxes is one of the economic methods of managing and ensuring the relationship of national interests with the commercial interests of entrepreneurs. With the help of taxes, the relationship of taxpayers with the budgets of all levels, as well as with banks, higher organizations and other subjects of tax relations is determined. With the transition to market relations, the role of tax policy in regulating social production and the distribution of national income changes significantly: the role and importance of taxes as a regulator of a market economy in encouraging and developing priority sectors of the national economy, science-intensive industries increases. At the same time, the tax system is capable of self-regulation to a certain extent - an automatic increase in tax revenues, a reduction in government spending during a boom, and vice versa, a decrease in tax revenues and an increase in government spending during a recession due to the existence of stabilizers. 24. STATE REGULATION OF INCOME DISTRIBUTION main channel income redistribution is state regulation this process. Tax systems and government transfers (in cash and in kind), social security and insurance systems show that the state is involved in large-scale income redistribution activities. Any form of state regulation consists of material, institutional and conceptual components. Social regulation is not the exclusive privilege of the state. It covers not only the redistribution of income, but also other indicators of living standards. The objects of social regulation are environmental protection and protection of consumer rights. Social regulation is carried out by business units, trade unions, the church. The material basis of state regulation depends on the volume of production and its share, which is redistributed centrally through the state budget. The institutional framework is related to the organization of the redistribution process and the activities of the relevant institutions. The conceptual basis of state regulation is a theory that acquires the status of government doctrine. Alternative conceptual approaches to the state redistribution of income can be reduced to the problem of opposing equality and efficiency. State redistribution of income is carried out through budgetary and financial regulation. The state, in accordance with the priorities of social policy and existing social programs, provides social benefits in the form of cash and in-kind transfers. Social payments and services are diverse. They are differentiated according to the sources of formation and methods of financing, the conditions for providing them to the circle of recipients. Cash payments are related to compensation for loss of income as a result of: complete or partial disability, the birth of children, loss of breadwinners or work (unemployment benefits, etc.). Monetary social transfers are supplemented in whole or in part by free services in the health care, education, housing and transport sectors. All social transfers can be lump-sum or paid periodically over a set period of time. The amount of social benefits may depend on the statutory minimum per capita income or wages. Social transfers can take the form of tax credits. All social payments are made into the system of social insurance and social security, supplemented by state charity. In countries with a market economy, funding for these areas is carried out on a tripartite basis, and in countries with an administrative-command economy - centrally. The real incomes of the population were formed mainly at the expense of wages and income from public consumption funds (OFGG). The distribution of the OFP was carried out on a free or partially paid basis in accordance with the quantity and quality of the labor contribution to social production, as well as taking into account the need. 25. INFLUENCE OF THE STATE ON MARKET PROCESSES WITH THE HELP OF PRICE REGULATION In a mixed economy, the state plays a strictly defined role in economic life. The market mechanism leads to a significant recovery of the economy, but at the same time it is accompanied by recessions and crises, which can slow down the development of the economy. Therefore, the state seeks to develop such a market mechanism so that fluctuations in the market do not lead to devastating consequences in the economy. State regulation of prices is an attempt by the state, through legislative and budgetary and financial measures, to influence prices in such a way as to contribute to the stable development of the economic system as a whole. Depending on the specific economic situation, price regulation is of an anti-crisis and anti-inflationary nature. Price system - one of the most important elements of a market economy. It is interconnected with other elements of the market mechanism and reacts to their changes. State regulation through changes in budget expenditures, taxes, interest rates for loans and other economic levers is also manifested in changes in costs and prices for products and affects reproduction processes. In the transition to a market economy in Russia, when there has been a serious imbalance in the economy, the role of the state is to create market structures in order to ensure normal conditions for the development of the market. The development of entrepreneurship, the adoption of antimonopoly legislation, etc. are aimed at this. The state's conduct of antimonopoly policy should remove the artificial restriction and promote the development of competition in all sectors of the economy. However, competition can also be a destructive force, ruining entire groups of producers. Therefore, the task of state power is to ensure such a ratio of monopoly and competition that would not lead to destructive consequences. Antitrust regulation also provides for sanctions against "unfair business practices", which include: - price discrimination (discounts for some clients, allowances for others); - forced transactions (i.e. sale and purchase with some precondition, forced "sets" of goods and services); - knocking down prices below production costs (dumping to force out rivals and capture the market); - Refusal of deliveries to "objectionable" customers dealing with competitors of this company, or unreasonable return of ordered goods. All of these varieties of "unfair" practices are subject to investigation and suppression by the antitrust authorities. The degree of state regulation of prices varies depending on the state of the economy. It intensifies in crisis situations - during periods of accelerated inflation, growing scarcity of certain products, the need for rapid economic restructuring - and weakens as the crisis is overcome. In countries with dynamic, balanced economies, prices are regulated to a lesser extent than in countries with unbalanced and unstable economies. As the economy stabilizes, the scope of state regulation is reduced, and there is a gradual transition to free pricing. 26. STATE REGULATION OF INNOVATIVE PROCESSES Innovation - this is an innovation in a particular industry, not previously used, but open at the moment, bringing some benefits. The mechanisms of state regulation of innovation processes can be as follows: 1) accumulation of funds for research and innovation; 2) coordination of innovation activities, i.e. determination of general strategic guidelines for innovation processes; 3) stimulation of innovations; 4) creation of a legal framework for innovation processes; 5) formation of scientific and innovative infrastructure; 6) institutional support of innovative processes; 7) regulation of the social and environmental orientation of innovations; 8) raising the social status of innovation activity; 9) regional regulation of innovation processes; 10) regulation of international aspects of innovation processes (scientific, technical and innovation cooperation, as well as international transfer of innovations). The complexity of the object and the breadth of aspects of state regulation of innovation processes necessitate the development of a state innovation policy - a set of goals, as well as methods of influencing government structures on the economy and society as a whole, related to initiating and increasing the economic and social efficiency of innovation processes. Measures state innovation policy should include the promotion of competition, informatization of society, standardization and certification of products and services. In addition, the state should support innovation activities. This support can be provided by direct and indirect methods. Direct methods include financing R&D and innovation projects from budget funds, protecting the rights of participants in innovation activities (creating a state patent-licensing system), forming a state innovation infrastructure and innovation market, training qualified personnel, as well as moral support for innovation activities (presenting outstanding scientists and state awards to innovators, awarding honorary titles, etc.). The importance of indirect methods of state support for innovation is determined primarily by the fact that indirect stimulation requires significantly less budgetary costs than direct financing, which is especially important for modern Russia. Among the measures of indirect regulation, first of all, it is necessary to single out various tax incentives, including the reduction of VAT, sales tax, preferential taxation of dividends, preferential taxation of profits, etc. Indirect support for innovation activities can also be provided through government support for financial leasing. Leasing - this is the allocation of funds for the purchase of machinery and equipment from the manufacturer with their subsequent transfer to legal entities and individuals for temporary use for a fixed fee. A very effective measure is the state insurance of venture capital, which allows you to create the necessary investment base to support small and medium-sized innovative businesses. 27. CONCEPT OF POWER Concept "power" means the ability of a person to influence others in order to subordinate them to his will. It allows the manager to manage the actions of subordinates, direct them in line with the interests of the organization, encourage them to work more efficiently, and prevent conflicts that arise. Power is of two types: 1) formal authority is the power of office. The power of the position is due to the official place of the person occupying it in the management structure of the organization and is measured either by the number of subordinates who are directly or indirectly obliged to obey his orders, or by the amount of material resources that this person can dispose of without agreement with others; 2) real power - this is the power of both position and influence and authority. It is determined by a person's place not only in the official, but also in the informal system of relations and is measured either by the number of people who are voluntarily ready to obey this person, or by the degree of his dependence on others. The boundaries of formal and real power do not always coincide. Often their owners are different persons, even opposing each other, which weakens the mutual desire to monopolize power. This is positive. Thus, the more power is concentrated in the hands of an individual, the higher the price of mistakes and abuses. There are several bases of power in the enterprise. 1. This is power based on coercion or its potential. Subordination arises from the fear that failure to comply with the demands of the one in whose hands is in power will entail adverse consequences. For ordinary performers, these sanctions are mainly material in nature (a fine, deprivation of a bonus, etc.). For leaders, moral sanctions are more important, jeopardizing their official position, status, and authority. Power based on legal coercion or its possibility is called administrative. It exists in both state and non-state organizations. The main thing is that their activities and the corresponding requirements of the leaders are officially regulated. Being under the influence of fear, people consciously or unconsciously allow themselves to be dominated. But in practice, especially in modern conditions, such power is ineffective. This is due to two circumstances: - firstly, fear makes you obey only within the boundaries of the "zone of control", where a person can be caught in "hazing" behavior; - secondly, fear does not create people's interest in the results of work, does not offer effective incentives to work, which was proven in practice back in the days of slavery. 2. Another basis of power is the ownership of resources in the broadest sense of the word, which one person has, and the other does not, but needs them. First of all, we are talking about material, including monetary, resources necessary to satisfy certain needs, and in order to receive them, the person in need of resources allows the owner to rule over himself. 28. MONOPOLY Monopoly A market structure in which one firm is the supplier of a product that has no close substitutes on the market. A monopoly-dominated market is in stark contrast to a free market in which competing sellers offer a standardized product for sale. The access of other firms to a monopolized market is difficult or impossible, as there are barriers that prevent competitors from entering the industry. A barrier to entry is a barrier that prevents additional sellers from entering the monopoly firm's market. The role of barriers is performed by licenses, patents, exclusive rights received from the government, etc. They are a necessary condition for the long-term maintenance of the firm's monopoly power. The main feature monopoly is occupying a monopoly position. A monopoly position is desirable for every entrepreneur or enterprise. It allows them to avoid many of the problems and risks associated with competition, to take a privileged position in the market, concentrating certain economic power in their hands. Monopoly enterprises have the opportunity, from a position of strength, to influence other market participants, to impose their conditions on them. If there is a monopoly on the demand side of the market, then such a market structure is called monopsony. If a single seller and a single buyer oppose each other in the market, then a market structure arises, called a bilateral monopoly. Types of monopolies 1. Natural monopoly arises due to objective reasons. It reflects a situation where the demand for a given product is best satisfied by one or more firms. An example of a natural monopoly can be: a railway, a telephone company, enterprises supplying natural gas and electricity. Natural monopolies are subject to regulation. It may vary depending on the purpose of the regulation. 2. Administrative monopoly arises as a result of the actions of state bodies. On the one hand, this is the granting to individual firms of the exclusive right to perform a certain type of activity. On the other hand, these are organizational structures for state-owned enterprises, when they unite and report to different central administrations, ministries, and associations. Here, as a rule, enterprises of the same industry are grouped. They act on the market as one economic entity, and there is no competition between them. 3. Economic monopoly is the most common. Its appearance is due to economic reasons, it develops on the basis of the laws of economic development. We are talking about entrepreneurs who have managed to win a monopoly position in the market. There are two paths leading to it. The first is the successful development of the enterprise, the constant increase in its scale through the concentration of capital. The second (faster) is based on the processes of centralization of capital, i.e. on a voluntary merger or takeover by the winners of bankrupts. In one way or another, the enterprise reaches such proportions when it begins to dominate the market. 29. NATURAL MONOPOLY Natural monopoly - the state of the commodity market, in which the satisfaction of demand in this market is more efficient in the absence of competition due to the technological features of production. Goods produced by subjects of natural monopoly cannot be replaced in consumption by other goods. As a result, the demand for goods produced by subjects of natural monopolies depends to a lesser extent on changes in the price of this product than the demand for other types of goods. Natural monopoly arises due to objective reasons. It reflects a situation where the demand for a given product is best satisfied by one or more firms. At the heart of a natural monopoly are the features of production technologies and customer service. Here competition is impossible or undesirable. For example, energy supply, telephone services, etc. There are a limited number of businesses in these industries. Therefore, naturally, they occupy a monopoly position in the market. The main features of a natural monopoly: 1) the legal basis for the establishment, implementation and termination of the regime; 2) correlation of legislation on monopolies with the Law "On Competition", their differentiation through legal regulation; 3) the boundaries of the considered monopoly regimes by industries and types of management; 4) the general legal status of subjects of monopolies, the specific nature of their rights and obligations; 5) a system for regulating the activities of monopoly entities; 6) sanctions and liability for violation of the provisions of the legislation in the relevant field. Areas of activity of natural monopolies: 1) transportation of oil and oil products through main pipelines; 2) transportation of gas through pipelines; 3) services for the transmission of electrical and thermal energy; 4) rail transportation; 5) services of transport terminals, ports, airports; 6) services of public electric and postal communication. The monopoly regulatory institutions under consideration are exceptional. From an economic point of view, exclusivity means removing certain areas of management from the influence of purely market competitive mechanisms of self-regulation. The establishment of an appropriate monopoly regime means the introduction of a special situation in a separate sector of the economy, which is impossible without any economic and legal grounds. The legal grounds and principles for the use of the legal regime of monopolies should be indicated precisely in a federal legal act, taking into account the restrictive functions of this institution. When preparing such acts, it should be borne in mind that a natural monopoly is due to objective economic and technological features of production. The activities of natural monopolies cannot be considered as economic activities prohibited in paragraph 2 of Art. 34 of the Constitution of the Russian Federation. After all, the functioning of a natural monopoly is not aimed at monopolization, but at eliminating unfair competition. It is carried out exclusively within the framework of state regulation of market relations and in order to protect consumers. 30. PRICE DISCRIMINATION Price discrimination is selling at more than one price when price differences are not justified by cost differences. This is the most consumer-friendly form of imperfect competition. Price discrimination is possible under certain conditions: 1) the seller has monopoly power, allowing him to control production and prices; 2) the market can be segmented, i.e. buyers can be divided into groups, the demand of each of which will differ in the degree of elasticity; 3) a consumer who buys a product cheaper cannot sell it at a higher price. Price discrimination has three forms: 1) according to the income of the buyer. A physician may agree to a fee reduction from a low-income, less-capable patient with less health insurance, but charge higher-income, expensive-insurance clients more; 2) by volume of consumption. An example of this type of price discrimination is the practice of setting prices by electricity supply companies. The first hundred kilowatt-hours is the most expensive, since it provides the most important needs for the consumer (refrigerator, the minimum necessary lighting), the next hundreds of kilowatt-hours become cheaper; 3) by the quality of goods and services. Dividing passengers into tourists and business travelers on business trips, airlines diversify airfare prices: a tourist class ticket is cheaper than a business class ticket. 4) by the time of purchase. International and long-distance telephone calls are more expensive during the day and cheaper at night. Usually price discrimination is divided into two types. The first type refers to the conditions for the purchase of a product or payment for a service by an individual consumer, depending on the quantity of goods purchased at the same time. For example, a customer can purchase a pack of cigarettes for 1,5 rubles. or a block of cigarettes (10 packs) for 12 rubles. Or a long-distance network subscriber can talk on the phone for the first 2 minutes for 3 rubles. and the second 2 minutes for 1 rub. With a two-minute conversation, the subscriber pays 1,5 rubles. per minute, and with a four-minute - 1 rub. in a minute. In the latter case, the price discrimination of the volume of services in relation to an individual consumer appears in its purest form. The subscriber uses long-distance communication for the second two minutes at a low rate only after he has spoken for the first two minutes at a high rate. By setting different prices depending on the conditions of purchase, the firm actually segments the single market for the product into purchase options. For example, at different prices of cigarettes, when selling by pack and blocks, two markets are formed with their own prices for a pack of cigarettes. When establishing different tariffs for using the telephone, depending on the duration of the call, various markets for the provision of services of the same network are formed with their own tariff per minute and volume of demand. This is the second type of price discrimination, when a firm sets different prices for the same product in different markets. These markets may differ geographically, by consumer groups, by the time of purchase, etc. Or, as in the case of cigarettes, by purchase option. 31. OLIGOPOLY Oligopoly - a market structure in which there are several sellers, each of which has such a large share of the total sales that a change in the quantity offered by each of the sellers leads to a change in price. There are two types of oligopoly: 1) the first assumes that several enterprises produce an identical product; 2) the second assumes that several producers produce differentiated goods. However, in both cases, manufacturers are aware of the interdependence of their sales, production volumes, and investments. So, if one firm will participate in the creation of a new product model, then it should certainly expect similar actions from competitors. In such a situation, each firm knows that at least some of its competitors' decisions depend on its own behavior. Therefore, when making this or that decision, it is obliged to reckon with this circumstance. The oligopolistic interdependence of firms raises the rivalry between them to a qualitatively new level, turns competition into an ongoing struggle. In this case, the most diverse solutions of competitors are possible: they can jointly achieve some goals, turning the industry into a kind of pure monopoly, or fight each other. The latter option is most often carried out in the form of a price war - a gradual reduction in the existing price level in order to oust competitors from the oligopolistic market. If one firm cuts its price, then its competitors, feeling the outflow of buyers, in turn, will also lower their prices. This process may have several stages. But price cuts have their limits. It is possible until the prices of all firms are equal in terms of average costs. In this case, the source of economic profit will disappear and a situation close to perfect competition will arise. From such an outcome, consumers remain in a winning position, while producers, one and all, do not receive any gain. Therefore, most often the competitive struggle between firms leads them to make decisions based on the possible behavior of their rivals. In this case, each of the firms puts itself in the place of competitors and analyzes what their reaction would be. The interaction of firms in the market in an oligopoly Firms operating within an oligopolistic market structure tend to create a network of connections that would allow them to adjust their behavior in the common interest. One form of such coordination is the so-called price leadership. It lies in the fact that changes in reference prices are announced by a certain firm, which is recognized as the leader by all the others following it in pricing policy. Depending on the situation, some oligopolies may operate in much the same way as perfectly competitive markets, with prices equal or close to marginal cost. Others, with or without an open agreement, may operate more like monopolies, with prices above marginal cost and large losses as a result. 32. MONOPOLISTIC COMPETITION Monopolistic competition is a mixture of monopoly and competition. Monopolistic competition as a market structure is characterized by a relatively large number of small producers. These manufacturers offer similar but not identical products. Product differentiation can take many forms: 1) depending on the quality of the product; 2) from the territorial location of the company (a small store located close to customers can compete with a large store, but located far from a busy place); 3) depending on the methods of sales promotion (advertising by using the name of a famous athlete who consumes the product); 4) by convincing in the exclusivity of the consumer properties of the goods. This leads to the development of non-price competition. Economic rivalry in conditions of monopolistic competition is not limited to price alone, but also focuses on factors such as product quality, advertising, etc. Producers under monopolistic competition are small firms in both absolute and relative terms. Therefore, entry into the industry is relatively easy. Examples of industries dominated by monopolistic competition are retail, perfumery, household appliances and electronics, outerwear. First of all, consider the demand curve for the products of a monopolistic competitor. Obviously, it is elastic, but up to certain limits. It is more elastic than in a pure monopoly, since a monopolistic competitor is adjacent to other producers of a similar product. And if, for example, the price of his products falls, then, most likely, a huge number of buyers will use his product. Thus, the degree of demand elasticity depends in this case on the number of competitors and the level of product differentiation (number of substitutes). The greater the number of competitors and the less product differentiation, the greater will be the elasticity of the demand curve for each seller, the more the situation will resemble pure competition. A firm that is a monopolistic competitor in the short run will maximize profits or minimize losses, as in the case of a monopoly, with MR = MC. At the same time, the price of production will be established above the minimum of average total costs (P > min ATC) and above marginal costs (P > MC).  Profit maximization under monopolistic competition The firm may face losses, but continue to operate as long as they are less than fixed costs. If firms in conditions of monopolistic competition receive economic profits, then this will encourage other firms to enter a similar industry. 33. PRICE POLICY OF MONOPOLY FORMATIONS The price realizes the benefit of a monopoly position. One type of price is the monopoly price, which is set by the entrepreneur. It occupies a monopoly position in the market and leads to the restriction of competition and violation of consumer rights. This price is designed to generate super profits, or monopoly profits. Monopoly price feature - a conscious deviation from the real market price, which is established as a result of the interaction of supply and demand. The monopoly price is either upper or lower. It depends on who forms it - a monopolist or a monopsonist. In any case, the benefit is provided at the expense of the consumer or the small producer. The monopoly price is a certain "tribute". Society is forced to pay it to those who occupy a monopoly position. The market distinguishes: 1) monopoly high price. It is established by a monopolist who has occupied a certain part of the market. The consumer, deprived of an alternative, is forced to put up with it; 2) monopoly low price. It is formed by a monopsonist of relatively small producers who have no choice. The monopoly price distributes the product between economic entities. Such distribution should be based on non-economic indicators. The essence of the monopoly price also reflects the economic superiority of large-scale, high-tech production. It provides a surplus product. The structure of the monopoly price is expressed by the formula: Rmon. = P1 + P2 + P3, where P1 is the average profit that entrepreneurs receive in the conditions of free movement of capital; P2 - excess profit received by entrepreneurs as a result of innovation; P3 - monopoly excess profit from the abuse of a monopoly position. The monopoly price is the maximum price at which a monopolist can sell a good or service for maximum monopoly excess profit. It is impossible to keep such a price for a long time. A monopoly can regulate production, but not demand. It has to take into account the reaction of buyers to price increases. Only goods for which there is an inelastic demand can be monopolized. In any case, raising the prices of products leads to a restriction of its buyers. The monopolist has two options: 1) the use of scarcity to keep a high price; 2) increase sales at reduced prices. One of the alternatives to price behavior in oligopolistic markets is price leadership. Oligopolists have a common interest in maintaining uniform prices and preventing "price wars". This is achieved by an implicit agreement to accept the prices of the leading firm. The leading firm is the largest firm that determines the price of a particular product. Other firms accept it. Other pricing options are also possible. The option of a direct agreement between the oligopolists is not excluded. The price of monopolists should be under the control of the state. The government constantly regulates prices, sets limits. There is a need to ensure a certain level of profitability of the company, the possibilities of its development. 34. PRODUCTION FUNCTION, PRODUCTION FORCES, INDUSTRIAL RELATIONS production function is the efficient output of products from various factors of production. The production function does not allow irrational use of resources, i.e. combinations of resources that reduce output are never used. The main purpose of production and costs is to answer how much resources need to be involved and in what proportions, if the firm has a goal to increase production. The production process can be considered as the relationship of factors of production, as a result of which a finished product or service is obtained. If we consider the production process from this position, then the production process - a production function - is: 1) a way to establish a connection between resources and output; 2) an indicator of the maximum possible output that can be obtained from a given amount of resources; 3) an indicator of the minimum amount of resources that is necessary to obtain a given volume of production, if the goal of maximizing the volume of production is not set. Factors of production and resources are understood as three factors of production - capital in the form of: 1) means of production; 2) material resources; 3) labor resources. The production function itself can be expressed by the physical volume of production, as well as the volume of services provided by medical institutions, banks, insurance institutions, etc. production forces. The material basis for the development of the economy is the production forces. These are the forces of nature and society, factors of production and resources that can create national wealth in any form and ensure the growth of labor productivity. The traditional classification distinguishes the production forces of the first and second order. The former include the means of production and labor, including as a specific component of entrepreneurial ability. The productive forces directly influence the conditions and results of the labor process. The labor process is a process of conscious, expediently directed activity to create material and non-material values to meet growing, structurally and qualitatively changing needs. The production forces of the second order include any factors of production that can be included in the production process either at the present moment or in the next period of development (natural forces, labor compensation). They influence the result of the labor process through intermediate links. Relations of production. Production relations are a social form of realization of production forces. The main trend in the interaction of production forces and production relations is the interdependence and conformity of development. If a specific level of production forces forms a certain number of production relations, then there is also an inverse effect of production relations on production forces. The totality of production relations is formed into a definite economic system. It is based on property relations. 35. MARKET FOR PRODUCTION FACTORS The market for factors of production is different in that producers, who used to be sellers of goods, act as buyers, providing the production process with the necessary resources. Producer costs become income for resource sellers. Therefore, the level of income in society depends on the level of development of production, on their rational distribution among individual producers. Supply of factors of production depends primarily on the specifics of each market. The fact is that the market for factors of production consists of three types of market: the labor market, the land market, and the capital market. Depending on the factors of market development, an offer is formed. However, common to all markets is that the amount of resources offered for sale is limited in comparison with the needs in their production. For a manufacturing firm, the prices of resources are of great importance, since the level of production costs depends on them. Given the technical basis, prices will determine the amount of resources that can be used. Demand for factors of production. A feature, a specific feature of the demand for any factors of production is that it has a derivative, secondary character in comparison with the demand for final consumer goods. The derivative nature of the demand for factors of production is explained by the fact that the need for them arises only if they can be used to produce final consumer goods that are in demand. The demand for any factor of production can rise or fall depending on whether the demand for consumer goods made with that factor rises or falls. Demand for factors of production is presented only by entrepreneurs. Entrepreneurs seek to discover revenue opportunities not seen by competitors. Factor markets provide entrepreneurs with information about prices, technical and economic characteristics of goods, the level of production costs, supply volumes, etc. The organization of the production process requires many factors: labor, land, equipment, raw materials, energy. All of them, to a greater or lesser extent, can be complementary and interchangeable: living labor can be partly replaced by technology, and vice versa, natural raw materials can be replaced by artificial ones, etc. However, labor, technology, and raw materials are linked and complementary only in a single production process. Individually, each of them is useless. But ceteris paribus, a change in the prices of one of these factors causes a change in the attracted quantity not only of this, but also of the factors of production associated with it. For example, higher wages and relatively low prices for machinery can cause a decrease in the demand for labor and an increase in demand for machines that replace labor, and vice versa. Consequently, the demand for factors of production is an interdependent process, where the volume of each resource involved in production depends on the price level not only for each of them, but also for all other resources and factors associated with them. 36. WORK FORCE In the market conditions of the functioning of the economy work force is the subject of a sale. The product "labor force" has a number of specific features, the most important of which are: 1) the employee, as the owner of the labor force, is endowed with certain rights, the protection of which is provided by the state. The employer is obliged to comply with the norms of legislative law established and accepted in society in the field of labor relations; 2) the commodity "labor" is the leading factor of production, ensuring competitiveness and economic growth; 3) the employee needs to maintain his functional capacity for productive work, regardless of the sale of labor power by consuming a certain set of vital goods; 4) the employee enables the employer to use his labor force until it is paid in monetary terms, thereby lending to the entrepreneur; 5) the use value of labor power is determined by a number of characteristics, among which experience, knowledge, and qualifications are important. The specificity of the labor force causes different pricing models. From the position of the reproductive approach applied to the product "labor force", four main phases are distinguished: 1) formation. The phase of the formation of high-quality functional abilities for work includes school, university, industrial training, advanced training, etc.; 2) distribution and exchange. The phases of distribution and exchange of labor involve the hiring, firing and relocation of workers; 3)use. The phase of using the labor force implies its direct participation in expedient, practical activities. The price of labor power from the standpoint of the reproduction approach should cover the costs incurred by the owner of labor power in all four phases under consideration. The price of labor power, the monetary expression of which is wages, must ensure expanded reproduction and qualitative development of labor power. The most important functions of wages in a market economy include stimulating an employee to highly productive work, ensuring social justice, and taking into account the measure of human labor in the process of pricing a product. Marketing and workforce. Labor force marketing is aimed at balancing the forces of demand and supply of labor in order to optimally meet the needs of the parties to social and labor relations. The purpose of labor force marketing is to create an effective system for regulating the employment of the population. The marketing approach to the study of the labor market allows: 1) increase the degree of awareness, selectivity and effectiveness of social and labor relations; 2) ensure effective regulation of the processes of formation, distribution, exchange and use of labor resources; 3) to form a high economic culture of employees and employers; 4) to improve the level and quality of life of the population of the country through ensuring the efficient use of labor in production activities and meeting the interests and needs of all parties to social and labor relations. 37. THE CONCEPT OF PHYSICAL CAPITAL AND ITS COMPOSITION physical capital - this is a durable production factor (fixed capital), it has been involved in production for many years. To characterize the capital market, it is important to take into account the time factor. To decide whether an investment is profitable, firms compare the present value of a unit of capital with the future return provided by that unit of investment. The procedure for calculating the present value of any amount that may be received in the future is called discounting. And the present value of future earnings is the present value. If the present value of expected future returns on investment is greater than the cost of investment, then it makes sense to invest. Therefore, the present value is necessary for firms to make investment decisions, and hence access the physical capital market. The structure of the physical capital market is highly repetitive and extremely diverse in the quality of objects of exchange. One of the significant segments of the physical capital market is the used equipment market. The peculiarity of this segment of the physical capital market is that it is on it that the depreciation rate is determined - the most important characteristic of the functioning of physical capital. Another aspect of the category of capital is related to its monetary form. Views on capital are diverse, but they all have one thing in common: capital is associated with the ability to generate income. Capital could be defined as investment resources used in the production of goods and services and their delivery to the consumer. It is customary for economists to distinguish between capital materialized in buildings and structures, machines, equipment, functioning in the production process for several years, serving several production cycles. It is called fixed capital. Another type of capital, including raw materials, materials, energy resources, is completely spent in one production cycle, embodied in manufactured products. It is called working capital. The money spent on working capital is fully returned to the entrepreneur after the sale of products. Fixed capital costs cannot be recovered so quickly. Control in the firm must be entrusted to the supplier of the most specific factor, otherwise the latter will simply have no interest in participating in the firm. In order to determine the most specific factor of production, it makes sense to pay attention to the nature of the input of these factors into the production process. The input of physical capital into the production process is explicit, it is relatively easy to identify, and the value of the contribution of physical capital can be measured relatively easily. In addition to being explicit, the introduction of physical capital into the production process is also discrete. This means that physical capital is actually advanced, available even before its use, which takes a certain period of time. 38. CONCEPT OF INFLATION Inflation - this is an increase in the general level of prices in the country, which arises in connection with a long-term disequilibrium in most markets in favor of demand. In other words, inflation is an imbalance between aggregate demand and aggregate supply. Specific economic circumstances can also push prices up. For example, the energy crisis of the 1970s. manifested itself not only in the growth of oil prices (during this period, the price of oil increased by almost 20 times), but also in other goods and services: in 1973, the general price level in the United States rose by 7%, and in 1979 it rose by 9%. - by XNUMX%. Reasons for inflation 1. The imbalance of public spending and revenues, expressed in the state budget deficit. If this deficit is financed by borrowing from the country's central bank of issue, in other words, through the active use of the "printing press", this leads to an increase in the money supply in circulation. 2. Inflationary price increases can occur if investments are financed by similar methods. Investments related to the militarization of the economy are especially dangerous for inflation. Thus, the unproductive consumption of the national income for military purposes means not only the loss of social wealth. At the same time, military appropriations create additional solvent demand. Demand leads to an increase in the money supply without a corresponding commodity coverage. The growth of military spending is one of the causes of chronic budget deficits and an increase in public debt in many countries, to cover which the state increases the money supply. 3. The general increase in the price level is associated by various schools in modern economic theory and with a change in the structure of the market in the XNUMXth century. This structure is less and less reminiscent of the conditions of perfect competition, when a large number of producers operate on the market, products are characterized by homogeneity, and the flow of capital is not difficult. The modern market is largely an oligopolistic market. And the oligopolist has a certain degree of power over the price. And even if the oligopolies are not the first to start a "price race", they are interested in maintaining and strengthening it. As you know, an imperfect competitor, seeking to maintain a high level of prices, is interested in creating. Not wanting to "spoil" their market by lowering prices, monopolies and oligopolies prevent the increase in the elasticity of the supply of goods due to rising prices. Limiting the influx of new producers into the oligopolistic industry maintains a long-term discrepancy between aggregate demand and supply. 4. With the growth of "openness" of the economy, the danger of "imported" inflation increases. In conditions of a constant exchange rate, the country each time experiences the impact of an "external" increase in prices for imported goods. The possibilities of combating "imported" inflation are quite limited. You can devalue your own currency and make imports cheaper. But the devaluation will simultaneously make the export of domestic goods more expensive, and this means a decrease in competitiveness in the world market. 39. UNEMPLOYMENT Unemployed - These are people who do not have a job, but are ready to start it or looking for it. Many workers do not fall into the category of employed. A significant part of this group is made up of people involved in housekeeping and childcare. They are counted as employed if they receive monetary remuneration for their work. Employment does not include working children under the age of 16. Not every "unemployed" falls into the category of the unemployed. Unemployed are not considered people who are absent from the workplace due to illness, vacation. They are included in the employment category. Part-time workers are also considered employed. Another definition of unemployment - "unable to find a job" - partially corresponds to the true state of affairs. The number of unemployed sometimes exceeds the number of people who cannot find work. The unemployed are people who are only temporarily laid off from their jobs. Their activities in their previous positions will be resumed. There is a category of people who are registered as unemployed in accordance with the requirements of income redistribution programs. Perhaps they do not have the level of qualifications required to get a job, so they move from one place to another, offering their services. The "unable to find a job" refers to underemployed people. These are those who are forced to work part-time or part-time work. Types of unemployment There are three types of unemployment: frictional, structural and cyclical. 1. Frictional unemployment is a short period of unemployment required to find a new job. This type of unemployment covers people who have found a job and expect to start working in a new place within a week. 2. Structural unemployment is a situation in which a worker is unemployed for long periods. Such long periods of unemployment are due in part to structural shifts in the economy. They devalue the skill level of certain categories of the labor force. Structural unemployed are workers with low qualifications and little work experience. Unemployment of frictional and structural types exists both in favorable and in unfavorable periods of economic development. The total number of unemployed of both types is often referred to as the natural rate of unemployment. 3. Cyclical unemployment is the difference between the actual unemployment rate and the natural rate. In today's economy, the unemployment rate does not always remain at its natural value. In the process of development, the economic system goes through stages of expansion and contraction. At the same time, the unemployment rate also changes. As a result of a strong recovery in economic activity, the unemployment rate may fall below its natural rate. The duration of the average period of unemployment decreases compared to the normal value. With a decline in economic activity, cyclical unemployment approaches frictional and structural. 40. RENT The main feature of economic relations associated with the use of land as a non-reproducible, limited natural factor is the existence ground rent. By renting land to entrepreneurs, landowners receive a certain payment for this - rent. It is the limited, inelastic supply of land that is the most important reason for the peculiarities of pricing in agriculture. It is the unique conditions of supply of land and other natural resources that distinguish rent payments from wages, interest, and profits. Economic theory pays particular attention to land rent, i.e. rent in agriculture. This is due to the fact that for a long period of time agriculture was the leading sector of the economy. Let us consider some interpretations of land rent in various economic theories. Land rent is the central economic category that regulates economic relations between the landowner and the entrepreneur who rents land for agriculture on a capitalist basis. An analysis of the formation of rent allows us to find out the sources of income for these two subjects of rental relations, to reveal the influence of the natural factor and the legal form of ownership on the mechanism of the emergence of rent. Externally rent is a payment for the use of land, which its owner receives from the tenant. Obviously, it is part of the value of the product received by the entrepreneur. But its nature, sources and circumstances of occurrence will be shown by theoretical analysis. It involves the clarification of two main circumstances that determine its occurrence: 1) features of pricing for agricultural products, in which the natural resource has a decisive influence on labor productivity; 2) the specifics of obtaining excess profits in this industry and the reasons for the stability of their reproduction. These circumstances are generated by the following features inherent in the natural factor of production: 1) land and many other natural resources are not freely reproducible working conditions, like industrial tools and materials; 2) the limitedness of agricultural land in general, and of land of better and medium quality, all the more, determines the meager elasticity of land supply. Features of rental relations Land either acts as a direct factor of production, or is used as a territory for the placement of industrial, residential and other premises, transport and other communications. But unlike most other means of production, land is not a freely reproducible factor of production. In modern conditions, a non-reproducible factor of production is becoming more significant. This factor is now the whole natural environment, which is turning into a condition for the reproduction of the world economy as a whole. However, the natural environment in many of its manifestations is only just beginning to be widely included in real economic relations that affect the reproduction of both individual and all social capital. 41. WAGE Wages is the price paid for the use of labor. Labor in a broad sense means: 1) wages for workers of different professions; 2) wages for diversified specialists - lawyers, doctors, dentists, teachers. 3) wages of employees of small enterprises - hairdressers, plumbers, TV repairmen and many different merchants - for labor services provided in the implementation of their business activities. Although in practice wages can take many forms (bonuses, honoraria, commissions, monthly salaries), we will refer to all of these by the term "wages" to denote the wage rate per unit of time - per hour, day, etc. This designation has certain advantages in that it reminds us that the wage rate is the price paid for the use of a unit of labor services. It also helps to clearly distinguish between "wages" and "general earnings" (the latter depending on the wage rate and the number of hours or weeks of labor services offered on the market). Types of wages 1. Nominal wage is the amount of money received per hour, day, week, etc. The nominal wages are: - payment accrued to employees for hours worked, quantity and quality of work performed; - payment at piece rates, tariff rates, salaries, bonuses to pieceworkers and time workers; - surcharges due to deviations from normal working conditions, for night work, for overtime work, for foremanship, payment for downtime through no fault of the workers, etc. 2. Real wages - this is the amount of goods and services that can be purchased for nominal wages; real wages are the "purchasing power" of nominal wages. Real wages depend on nominal wages and the prices of goods and services purchased. The percentage change in real wages can be determined by subtracting the percentage change in the price level from the percentage change in nominal wages. Thus, an increase in nominal wages by 10% with an increase in the price level by 7% gives an increase in real wages by 3%. Nominal and real wages do not necessarily move in the same direction. For example, nominal wages may rise and real wages fall at the same time if commodity prices rise faster than nominal wages. Depending on the amount of labor and time, there are two main forms of remuneration: piecework и time-wise. General salary level Wages vary by country, region, activity, and individual. The general level of wages is a complex term containing a wide range of different wage rates. This generally loose definition is a convenient starting point for comparing and explaining wage differentiation across countries and regions. 42. INDIFFERENCE CURVE Indifference curves serve as a tool for analyzing consumer behavior. If the consumer does not care which combination to prefer, then he is in a position of indifference. At each point on the indifference curve, there is a set that gives the same satisfaction to the consumer. An indifference curve is a set of points at which alternative combinations of two goods that bring equal satisfaction are located.  indifference curve The figure shows a typical indifference curve with a negative slope. The quantity of product X is measured on the horizontal axis, product Y on the vertical axis. All possible combinations of goods X and Y presented on the indifference curve provide the consumer with the same level of utility. The indifference curve has a negative slope, which reflects the fact that the buyer receives satisfaction from both goods under the following condition; if he increases his consumption of good X, he must give up a certain amount of good Y in order to maintain his overall level of utility. The indifference curve has a convex shape. This shape of the curve means that the consumption of X increases relative to the consumption of Y, while the buyer constantly gives way to a decreasing amount of Y for a constant increase in the amount of X. So, at point A, the consumer has 10 units. X and 50 units. Y. To bring X consumption from 10 to 20 units, he reduces Y's purchases by 15 units, bringing them to the level of 35 units. Y. At the same time, in the interval between points A and B, he again retains the same level of satisfaction (utility). Consider the position of the consumer at points C and D. At point C, he has 40 units. X and 20 units Y. Moving along the curve to point P, he will additionally receive 10 units. X, but donates only 5 units this time. Y, which is much less compared to the amount of rejection of Y at point B. Analysis of consumer movement along the curve from point A to point D reveals important patterns of consumer preference, from which the categories of marginal rate of substitution (MRS) and declining marginal rate of substitution are directly derived. The marginal rate of substitution of good X for good Y measures the desire (inclination) of the consumer to exchange one product for another. It represents the maximum amount of good Y that a consumer is willing to give up in order to get one extra unit of good X, while keeping the overall level of satisfaction constant. The marginal rate of substitution (MRSxy) of good X for good Y is: MRSхy = - ? Y/? X, where ? Y - change in the consumption of goods Y; ? X - change in consumption of good X. A negative sign is introduced so that MRSxy in a particular numerical expression is a positive number. The marginal rate of substitution at any point is equal to the absolute value of the tangent of the slope of the indifference curve at that point. 43. THE CONCEPT OF INTELLECTUAL PROPERTY In today's market economy in Russia, important property items such as trade names, trademarks, service marks and appellations of origin are becoming increasingly important. Creating equal economic conditions for various types of commodity owners, the introduction of competitive principles in their activities determines the objective need for the assessment and protection of intellectual property. Patent Law deals with industrial property, i.e. with exclusive rights exercised in the sphere of production, trade circulation, provision of services, etc. But the legislation does not consider the means of individualization of entrepreneurs and their products as the results of creative activity and does not recognize any special rights for their specific creators. When it comes to the legal protection of intellectual property, the main function is to ensure the individualization of manufacturers and their goods, works and services. brand names, which are the commercial name of the enterprise, are inextricably linked with its business reputation. Under this name, the entrepreneur makes transactions and other legal actions, bears legal responsibility and exercises his rights and obligations, advertises or sells his products. Brand names that have become popular with consumers and trusted by business partners bring the entrepreneur not only income, but also well-deserved respect in society and recognition of his merits. Therefore, the right to a firm should also be considered as an important personal non-property benefit. The use of a company name also performs an essential informational function, since it brings to the attention of third parties data on the ownership, type and organizational form of the enterprise. Trademark is an active link between the manufacturer and the consumer, acting as a silent seller. Along with a distinctive function, a popular trademark gives consumers a certain idea of the quality of the product. One of the important functions of a trademark is also advertising of manufactured products, since a trademark that has won the trust of consumers promotes the promotion of any goods marked with this sign. It is also known that on the world market the price of products with a trademark is on average 15-25% higher than the price of anonymous products. Finally, a trademark serves to protect products on the market and is used in the fight against unfair competition. Similar functions are performed by such a means of designating products as the name of the place of origin of goods. Along with them, the designation of a product by the name of its place of origin acts as a guarantee of the presence in the product of special unique properties due to the place of its production. By providing legal protection for appellations of origin, the state protects and stimulates the development of traditional crafts and crafts, the products of which are always in great demand among consumers. Thus, the legislation on means of individualization is an important part of the legal protection of intellectual property. 44. CONCEPT OF THE ENTERPRISE Company - This is a specific organization that produces a certain product in order to profit from its sale. An enterprise can be characterized by its goals. Material goals are the goals of achieving certain material results. Usually they are formed in the form of a production program. Material goals are achieved through the implementation of actions (operations, processes, activities). Social goals are the desired relationships, firstly, between the employees of the enterprise, and secondly, with individuals and groups of people in the external environment. Value targets are expected future profits. Enterprise revenue Each enterprise, before starting production, determines what profit, what income it can receive. Sales revenue is an indicator that characterizes the final result of the enterprise's production activities. It is defined as the product of the average price and the number of units sold. Revenue is the main source of formation of the enterprise's own financial resources. It is formed as a result of the activity of the enterprise in three main areas: - main; - investment; - financial. The proceeds from the main activity are in the form of proceeds from the sale of products (work performed, services rendered), expressed as a financial result from the sale of non-current assets, the sale of securities. Revenue from financial activities includes the result of the placement of bonds and shares of the enterprise among investors. Two methods of reflecting revenue from the sale of products are legally fixed: for the shipment of goods (performance of work, provision of services) and presentation of settlement documents to the counterparty - accrual method; upon payment - cash method. There is a significant difference between these methods. The moment of sale in the first case and, consequently, the formation of revenue remains the date of shipment, i.e. the receipt of funds by the enterprise for the shipped products is not a factor in determining revenue. This method is based on the legal principle of the transfer of ownership of goods. But in case of late payment for the delivered products, insolvency of the payer, the enterprise may have serious financial problems, which may result in non-payment of taxes and tax obligations, disruption of settlements with related enterprises, and the emergence of a chain of non-payments. In order to mitigate the negative consequences of non-payments, the enterprise has been granted the right to form a reserve for doubtful payments. Its value is determined by the enterprise based on an analysis of the composition, structure, size and dynamics of non-payments for the reporting period. The allowance for doubtful debts is an additional source of financing current liabilities. In domestic practice, the second method is most widely used - the determination of revenue by the actual receipt of funds to the cash accounts of the enterprise. This procedure for accounting for revenue allows you to make timely settlements with the budget and extra-budgetary funds, since there is a real source of money for accrued taxes and payments. 45. ORGANIZATIONAL AND LEGAL FORMS OF THE ENTERPRISE There are three main organizational and legal forms of the enterprise. 1. Individual enterprise - This is a small company, the owner of which is also its employee (for example, an accountant, director). A sole proprietorship is owned by one owner. He manages it independently and at his own discretion. For all arising obligations, the entrepreneur is personally liable. К advantages of individual enterprises relate: 1) simplified business activities; 2) independence of the enterprise owner; 3) the ability to make decisions independently; 4) the concentration of the entire amount of profit from the owner of the enterprise. Disadvantages of individual enterprises: 1) property liability extends to all property, including personal property; 2) full and sole responsibility for the consequences of their decisions. Forms of individual enterprises: 1) individual labor activity (based on own labor); 2) an individual private enterprise (the labor of hired workers is used). 2. Joint Stock Company - this is an enterprise based on the pooling of capital of the participants in the enterprise. A share is a guarantee of capital investment in an enterprise. The holder of a share is called a shareholder. The share gives the shareholder the right to receive income from activities and participate in the management of the joint-stock company. Advantages of a joint stock company: 1) the possibility of attracting large-scale financial resources necessary for large-scale production; 2) the exit from the joint-stock company of one of the participants does not lead to a stoppage of production; 3) use hired managers who are able to effectively and professionally resolve any issues; 4) a joint-stock company is a limited liability company. In the event of bankruptcy, the shareholder enterprise loses only the amount of money that he invested in this enterprise. This guarantees shareholders a reduction in risk. At the same time, the possibility of greater profit remains. Disadvantages of a joint stock company: 1) the organization and liquidation of the enterprise results in large cash costs; 2) the participation of shareholders in management and control over them is weaker than the power of the owner of a small enterprise; 3) the complex organizational structure of a joint-stock company provokes bureaucratization. 3. Partnership - activities based on the pooling of shares (in the form of money or property) of the participants in the enterprise. The amount of the share is recorded in the certificate, and its owner has the right to receive profit. He also has the right to vote at the meeting. Partnership Forms: 1) general partnerships. The organization of a full partnership is based on the principles of full and joint liability. This form is used in enterprises where intellectual capital prevails (auditing, law firms). Participants are liable for obligations not only with the property of the enterprise, but also with personal ones; 2) partnerships with limited liability. Based on the distribution of liability only on the capital of the enterprise. In the event of bankruptcy, the participants lose only their share; 3) mixed partnerships. Includes total members and contributors. The liability of the latter is limited by the size of the share. 46. EXTERNAL ENVIRONMENT OF THE ENTERPRISE The enterprise exists in a complex world that has a multifaceted impact on it. Factors that affect the external environment of the enterprise, can be divided into two groups: direct и indirect development. Direct impact factors: 1) capital. It is necessary for the normal functioning of the enterprise. Capital can be own and borrowed; 2) the labor force is the most important factor in the external environment of the enterprise. How successful the enterprise will be depends on the level of qualification, on the efficiency; 3) raw materials and materials. They must be of high quality and in the required quantities. The enterprise should have a well-established system of incoming quality control of deliveries, a carefully worked out system of supply, transportation of appropriate goods, warehousing; 4) resources. Capital, raw materials, materials, labor force, etc. act as resources; 5) consumers. Both citizens who need to satisfy their needs and enterprises act as consumers of products. The well-being of the enterprise, the level of profit, competitiveness largely depends on the study of its consumer; 6) competitors. Consumers are the main object of competition. Competitive struggle also has to be waged for capital, labor resources, raw materials and materials. The level of competition depends on the ability of the enterprise to compete effectively with manufacturers of similar products. To be competitive, an enterprise needs to improve working conditions, create favorable investment conditions, improve the quality of the product; 7) bodies of state and municipal administration. They must ensure law and order and protect enterprises and their property from criminal encroachments (swindlers, bribe-takers). The state promptly informs the enterprise about all decisions made by the authorities and new regulations. Factors of indirect impact: 1) politics. The presence of a stable policy, authorities and legislation creates a favorable background for the development of the enterprise, helps to attract investment. The presence of diplomatic relations with foreign states in which enterprises are interested is connected with the political situation. Politics determines the attitude of the authorities towards private property and entrepreneurial activity; 2) economics. Economic boom, recession, crisis have a profound impact on businesses. The economy determines exchange rates, stock and securities prices. Economic circumstances shape the demand and price of goods. The possibility and conditions for obtaining capital (investment climate, state budget, loan interest rate) depend on the state of the economy. External and internal loans at the enterprise directly depend on the economic situation in the country; 3) culture and society. The influence of culture and social factors of life at the enterprise is associated with a certain system of values of society, traditions, stereotypes of behavior. The system of values determines the practice of the organization, indicates what is most important for the enterprise (for example, "the main thing for us is a satisfied consumer"). 47. INTERNAL ENVIRONMENT OF THE ENTERPRISE The creation and activities of each organization take place in a specific environment that determines the type of this enterprise, the procedure for its functioning. Elements of the environment that affect the organization from the inside, are its own part, called the internal environment of the enterprise. The internal environment of the enterprise is determined by its structure and management. The management structure is understood as the mutual arrangement of its elements and the nature of the connections between them. There are two main, distinct organizational structures: 1) linear structure; 2) target structure. Each corresponds to the control system of the same name. The line system provides control over a direct line from top to bottom. Through this system, managers communicate their orders to each executor and monitor their implementation. In line management, each superior manager is the direct supervisor of all subordinate personnel, and all subordinate employees are considered to be his subordinates. The closest direct supervisor is called the immediate supervisor. Orders are given, as a rule, at the command "from top to bottom", i.e. pass through the heads of all levels of government. "From the bottom up" there are reports on the implementation of orders. As an exception, it is possible to transfer commands and receive relevant reports, bypassing intermediate instances - from any direct superior to any subordinate and vice versa. In this case, the subordinate is obliged to fulfill the order, report on its execution to the person who gave it, as well as to his immediate superior. Line management ensures the unity of enterprise management from the director to the workplace, the consistency of the actions of the administration and performers. With such management, managers - the director, his deputies, heads of production, workshops, sections, foremen and foremen are given full power in relation to subordinates. Target management was conceived as a permanent system for determining the specific goals (end results) of each employee's day. The formulation of goals should be done with maximum certainty. For all goals, the deadlines for achieving, the necessary resources and, very importantly, quantitative indicators are set, by which it is easy to control whether this goal has been achieved, and if not, what remains to be done, how much time and other resources it will take. Target management takes place when the goal plays a major role in solving all production and other management tasks at all levels. Target management is most typical for single and small-scale, as well as for pilot production. It is usually used when performing large, sometimes one-time events with new, extraordinary goals, such as the radical reconstruction and re-equipment of an enterprise, the transition to a fundamentally new type of product, the introduction of lease or cooperation, etc. The second type of flow of the management process is program management. К the internal environment of the enterprise also include: 1) labor collective; 2) management personnel; 3) relationships with suppliers, partners; 4) availability of equipment, machinery, machine tools. 48. FORMS OF PROPERTY In a market economy, a distinction is traditionally made between state and non-state property. К non-state includes private property with all modifications (joint-stock, cooperative). This system of relations recognizes the right of a particular subject to choose the ways of using the property object and the beneficial effect obtained as a result of this. State property as a system of relations ensures the viability of the entire economic system, i.e. when making decisions, the interests of the nation as a whole are taken into account. Depending on what form of ownership forms the basis of the economic system, the following types of ownership are distinguished: 1) an economic system with centralized control; 2) market system; 3) mixed economic system. Economic system with centralized control operates under state ownership in the complete absence of private ownership. In order to make decisions, government officials must have a large amount of information regarding the needs for inventory, raw materials, and production capacity. Therefore, a numerous expensive state-administrative bureaucracy is needed, which will collect the necessary information, process it, draw up current and long-term plans, coordinate them with each other, revise, and control implementation. The relations of disposal are carried out on a non-economic method based on an artificial monopoly, since the state nominally owns the material means of production, land and capital. At the same time, the producer's interest fades as soon as he is confronted with the need to carry out the orders of the bureaucracy. The search for a method that maximizes the useful effect is impossible on his part, since the functions are strictly regulated by the state bureaucracy. As a result, a method is introduced into the production process that is doomed to obsolescence and inefficient use of production factors. Labor productivity falls, the economic system as a whole becomes inefficient. An economic system based on the principles of the market, functions on the basis of the classical form of private property and its modifications, the use of objects of which historically forms a producer with a specific economic interest. Acting on the market as a seller of goods, he offers to evaluate his method of use, which brings a specific useful result. In this system, there is no monopoly of the order, which limits the functions of the manufacturer. High profit is the recognition of the most efficient and progressive method; low profit indicates its obsolescence, a decrease in the result and the need to start looking for a more efficient method of use. Mixed economic the system combines the advantages of the market with the use of administrative-hierarchical coordination of economic activity. A specific feature of this type of economy is the limitation of the economic functions of the state. Its economic activity is limited to the provision of goods or production, which cannot be carried out on the basis of competition. 49. ESSENCE OF COMMODITY POLICY Entrepreneurial activity is effective when the product produced by the company finds demand in the market, and the satisfaction of certain customer needs through the purchase of this product makes a profit. In order for the manufactured product or service to be always competitive, it is necessary to implement a lot of entrepreneurial and, of course, marketing decisions. Product policy is the core of marketing decisions, around which other decisions are formed related to the conditions for purchasing goods. The product is the basis of the entire marketing mix. If the product does not satisfy the needs of the buyer, then no additional costs for marketing activities can improve its position in the competitive market. Importance of commodity policy Commodity policy involves a certain set of actions or premeditated methods and principles of activity, which ensure the continuity and purposefulness of measures for the formation and management of the range of goods. The absence of such a set of actions leads to the instability of the assortment of the enterprise, failures, the susceptibility of the assortment to excessive exposure to random or transient market factors. The current management decisions in such cases are often half-hearted, poorly substantiated. The role of the guiding principle in the formation of the assortment is to, by combining the resources of the enterprise with external factors, to develop and implement a product policy. A well-thought-out product policy allows you to optimize the process of updating the assortment, serves as a kind of guideline for the company's management in the general direction of action, allowing you to correct current situations. The absence of a general, strategic course of action for an enterprise, without which there is no long-term commodity policy, is fraught with wrong decisions. Mistakes of this kind are costly to producers. Commodity policy - this is not only the targeted formation of the assortment and its management, but also the consideration of internal and external factors influencing the product, its creation, production, promotion to the market and sale. Classification of goods When choosing marketing strategies for individual products, the marketer has to develop a number of product classifications based on the characteristics inherent in these products. According to the degree of their inherent durability or material tangibility, goods can be divided into the following three groups: 1) durable goods - tangible products that usually withstand repeated use. Examples of such goods are televisions, equipment, clothing, cars; 2) non-durable goods - material products that are completely consumed in one or more cycles of use. For example, milk, shampoo, sugar; 3) services - objects of sale in the form of actions, benefits or satisfactions. Examples of such goods are repair work, a haircut at a barbershop, and a business plan for a company. 50. CONCEPTS AND ESSENCE OF BANKRUPTCY essence of bankruptcy. Bankruptcy is the state of an enterprise that precedes its closure due to lack of profit, the presence of financial difficulties and the impossibility of further carrying out its activities. The institution of bankruptcy is one of the most important mechanisms for ensuring the social responsibility of entrepreneurs in a market economy. With freedom of enterprise, i.e. the right to make lawful economic decisions solely at their own discretion, entrepreneurs must pay for possible mistakes in the loss of their property. The threat of bankruptcy and the forced deprivation of property associated with it disciplines entrepreneurs. Quantitative and qualitative factors are used to predict the bankruptcy of an enterprise. Quantitative factors: 1) a small value of the ratio of cash flow to total liabilities; 2) a high value of the ratio of debt obligations to equity capital and the ratio of debt obligations to total assets; 3) insignificant return on investment; 4) low profitability; 5) a modest value of the ratio of retained earnings to total assets; 6) low ratio of working capital to total assets and ratio of working capital to sales; 7) insufficient level of the ratio of non-current assets to medium-term and long-term liabilities; 8) low interest coverage ratio; 9) unstable profit; 10) the modest size of the company, determined by sales volumes and (or) total assets; 11) a sharp decline in the price of the company's shares, bond prices and profits; 12) a significant increase in the "beta" coefficient, representing changes in the company's share price relative to the market index: 13) a large difference between the market price of a share and its book value; 14) reduction of dividend payments; 15) a significant increase in the weighted average cost of capital of the company; 16) a high ratio of fixed costs to total costs. Qualitative factors: 1) poor financial reporting system and inability to control costs; 2) inexperience of the enterprise management; 3) the presence of industrial recessions; 4) the inability of the enterprise to obtain adequate funding and significant credit restrictions on any funding received; 5) inability to repay overdue obligations; 6) unskilled company management; 7) introduction of business into areas where managers have no work experience and where they are incompetent; 8) the inability of the administrative apparatus to quickly rebuild due to changes in the market, to keep up with the times, especially in technology-oriented business; 9) high level of commercial risk; 10) unsatisfactory insurance coverage; 11) underestimation by managers of the peculiarities of cyclic business activities; 12) inability to rebuild production in accordance with changes in consumer demands; 13) taking into account the requirements of strict government regulation; 14) susceptibility to lack of energy; 15) taking into account the potential unreliability of suppliers. 51. ORGANIZATIONAL AND LEGAL FORMS OF CARRYING OUT BUSINESS ACTIVITIES Entrepreneurial activity - this is an independent activity carried out at one's own risk, aimed at the systematic receipt of profit from the use of property, the sale of goods, the performance of work or the provision of services by persons duly registered in this capacity. Entrepreneurial activity can be carried out by citizens registered as individual entrepreneurs (IP). State registration of an individual entrepreneur is an act of an authorized federal executive body (MNS RF), carried out by entering into the Unified State Register of Individual Entrepreneurs information on the acquisition by an individual of the status of an individual entrepreneur or on the termination of entrepreneurial activity, as well as other information about an individual entrepreneur. State registration is carried out by the registering authority (Ministry of Taxation of the Russian Federation) at the place of residence of a citizen on the basis of his application and the documents listed below, and is carried out in the manner and within the time limits in force for legal entities. The registering authority, within a period of not more than 5 working days from the date of state registration, also submits to state non-budgetary funds (PF RF, FSS RF, MHIF RF) the information contained in the Register for registration of an individual entrepreneur as an insurer in each of these funds. Information about the place of residence is provided by the registration authority only upon request submitted by a person who has presented an identity document (an individual entrepreneur has the right to request from this authority information about persons who have received information about his place of residence). Legal entity recognized as an organization that: - has separate property (in ownership, economic management, operational management); - is liable with this property for its obligations; - may acquire property and personal non-property rights on its own behalf, bear obligations; - can be a plaintiff and a defendant in court, arbitration, arbitration courts. A legal entity must have an independent balance sheet or estimate. Forms of legal entities: commercial organizations and non-profit organizations. Commercial organizations pursue profit as the main goal of their activities. Must have a brand name. Non-profit organizations do not have the main purpose of their activities to make a profit and do not distribute the profits received among the participants (founders). They can carry out entrepreneurial activity only insofar as it serves to achieve the goals for which they were created. Business partnerships: general partnerships and limited partnerships. Business companies: joint-stock companies (open and closed), limited liability companies, additional liability companies. There are also production cooperatives (artels), state and municipal unitary enterprises. 52. RISKS IN BUSINESS Risks - Potentially existing risk of loss of resources or shortfall in income compared to the planned level. The activity of the enterprise is always associated with a certain risk. But entrepreneurs take risks, as its downside is the possibility of obtaining additional income. Risk can be viewed in two ways. On the one hand, it is an event that may or may not occur. As a result, a negative, zero or positive result is possible (technical, social, economic, etc.). On the other hand, risk is a subjective assessment of such an outcome and the resulting income or losses. The source of risk is the uncertainty of the economic situation, arising from a variety of variable factors, incomplete information about business processes. General approaches to risk management. Due to the fact that economic activity is subject to risk, entrepreneurs need to manage it. Risk management means determining the likelihood of its occurrence, taking the necessary preventive measures or aimed at compensating for it. Risk cannot be completely avoided, but it can be weakened to some extent and made manageable. Risk management - this is an activity aimed at mitigating the influence of the market on the final results: protection from them, their prevention, and the reduction of adverse effects. The risk management process also decides whether or not to enter the relevant situation. The main goal of risk management is to ensure, in the worst case, the unprofitability of the enterprise. The basis for this is balancing its size and potential benefits by comparing the positive and negative financial consequences of decisions. Risk insurance. For entrepreneurs, it is important not only to assess the actual magnitude of the risk to which the enterprise is exposed, but also, if it is impossible to prevent it, to provide at least partial compensation for losses. One way to do this is through insurance. Insurance is a system of measures to protect the interests of individuals and legal entities at the expense of monetary funds formed from the funds paid by them. A company that is in a state of bankruptcy is subject to destructuring or liquidation. Restructuring may consist in the allocation and concentration of viable industries by closing or merging divisions, changing economic ties, financial recovery, reorganization. The entrepreneur must keep in mind that sometimes it is not profitable to give up the activity. It can cause other risks, and sometimes it is impossible. So the risk has to be taken on. To mitigate the negative impact of the risk, an insurance reserve is created. It is defined as the average value of losses over three years, adjusted for inflation. The insurance reserve is designed to cover planned risks. Unplanned risks are compensated from any other available sources. Separation (segregation) of risks is carried out by separating assets. 53. GENERAL CONCEPT OF ELASTICITY Elasticity shows the dependence of changes in the magnitude of demand from changes in various factors. Factors affecting elasticity: - availability of good substitutes for goods; - specific weight in the consumer's budget; - the amount of income; - the quality of goods. Elastic properties Elasticity varies depending on the chosen price range. For demand curves, the elasticity is usually greater in the upper left corner of the graph than in the lower right corner. This is an arithmetic property of elasticity units. This is due to the initial quantity and price from which the countdown is based. Elasticity and slope of the demand curve. The slope of the demand curve depends on absolute changes in price and quantity, while elasticity theory deals with percentage changes in price and quantity. Variable and constant elastic demand curves Elasticity is determined on a given interval. Its definition on some other interval may be the same or change depending on the demand formula. Linear demand curve. The elasticity of the intervals of prices and the quantity of demand is not the same on the entire straight line representing demand. Elasticity changes as you move down the demand curve. Demand curve of constant elasticity. The demand curve can be represented non-linearly. The curve may be shaped such that the elasticity may be constant over any arbitrary interval. Elasticity of demand for resources The elasticity of demand for resources is determined by three factors: - first factor - the elasticity of demand for finished products: the higher it is, the more elastic will be the demand for the resource. When an increase in the price of a good causes a significant drop in demand for it, the need for resources decreases. In the case when, on the contrary, the demand for products manufactured with the help of these resources is inelastic, the demand for resources is also inelastic; - second factor - substitutability of resources. The elasticity of demand for them is high if, in the event of a price increase, there is the possibility of replacing them with other resources (for example, gasoline - diesel fuel) or introducing a more advanced technology (thanks to which, for example, the need for gasoline decreases); - third the factor that determines the elasticity of demand for resources is their share in total costs. The elasticity of demand depends on the share of these resources in the total production costs of finished products. Elasticity and time period When assessing the elasticity of supply, three time periods are considered. 1. Short-term refers to a period too short for the firm to make any changes in the volume of output (less than one year). 2. The medium term is sufficient to expand and reduce production at existing production facilities, but not enough to introduce new facilities. 3. The long-term period involves the expansion or reduction of the company's production capacity, as well as the influx of new firms into the industry in the event of an expansion in demand or exit from it, subject to a decrease in demand for this product. 54. PRICE ELASTICITY OF DEMAND The dependence of a change in the demand for a good on a change in its price is called price elasticity of demand. There are three types of elasticity of demand: 1) the elasticity of demand, when the volume of sales increases significantly with a slight decrease in price; 2) unit elasticity of demand, when the change in price (expressed as a percentage) is equal to the percentage change in sales. The elasticity of demand. Elasticity can be measured using the coefficient of elasticity:  This formula allows you to quantify all three options for price elasticity of demand. In the case of elastic demand, when the increase in quantity is greater than the reduction in price, the value of the coefficient exceeds one (ED > 1). With inelastic demand, ED < 1. In the case when the percentage change in price is equal to the change in quantity, the equality ED = 1 is set. Price elasticity of demand tends to be for luxury goods (jewelry) and for fairly expensive commodities (cars). Inelastic demand for essential goods. Giving a graphical interpretation of elasticity (Fig. 1), we note that the greater the elasticity coefficient, the flatter the demand curve.  Rice. 1. Graphical interpretation of demand with different elasticity There is also perfectly elastic and inelastic demand (Fig. 2). In the case of perfectly elastic demand, this is a horizontal demand curve (Fig. 2a). Consumers pay the same price regardless of the amount of demand (for example, for life-saving medicines). In the case of perfectly inelastic demand, they buy the same amount of goods at any price level. A change in price does not cause any change in demand (E = 0), and the curve is expressed as a vertical straight line (Fig. 2b).  Rice. 2. Extreme cases of elasticity of demand: a) perfectly elastic; b) absolutely inelastic 55. INCOME ELASTICITY OF DEMAND. CROSS ELASTICITY Income elasticity of demand is the ratio of the percentage change in demand for a product to the percentage change in consumer income:  where Q1 - quantity before changes; Q2 - quantity after changes; Y1 - income before changes; Y2 - income after changes. The income elasticity of demand is equal to the ratio of the percentage change in quantity to the percentage change in income, i.e. similar to price ratio. The consumer varies the demand for different goods in different ways with a change in income. Therefore, the indicator can have different (positive and negative) values. If the consumer increases the volume of purchases with increasing income, then the income elasticity is positive (E1 is greater than 0). In this case, it is rather a normal good (for example, an additional suit) that the consumer can afford with increasing income. If, at the same time, the growth in demand outstrips the growth in income (E1 is greater than 1), then there is a high income elasticity of demand. This happens with the demand for durable goods. Another situation is also possible, when the value of E1 is negative. We are talking about abnormal or low-quality goods. Consumers with increasing income buy less of such goods, preferring higher quality ones. The change in income elasticity is related to the notion of nominal and inferior goods. Since in this case income and demand move in the same direction, the income elasticity of demand for nominal goods will be positive. For inferior goods, an increase in income causes a decrease in demand. Here income and demand change in the opposite direction. Hence, the income elasticity of demand for inferior goods is negative. Essential goods are not sensitive to rising or falling income. Income elasticity of demand can be divided into three main forms: 1) positive. Here, the volume of demand grows with the growth of income - these are normal goods; 2) negative. Here, the volume of demand falls with the growth of income - these are goods of lower quality; 3) neutral (zero). Here, the volume of demand is not sensitive to changes in income - these are essential goods. Cross elasticity is the ratio of the percentage change in the volume of demand for one good (A) to the percentage change in the price of another good (B). The cross elasticity formula looks like this:  Cross price elasticity can be positive, negative, or zero. The positive form of cross-elasticity is characteristic of interchangeable goods. For example, an increase in the price of white bread causes demand for black bread. The negative form of cross elasticity is characteristic of complementary goods. For example, an increase in the price of gasoline will cause a decrease in the demand for lubricating oil. Zero cross elasticity is typical for goods that are neutral with respect to each other. For example, furniture and shoes, car and bread. 56. ELASTICITY OF SUPPLY The concept of supply elasticity. The sensitivity of supply to changes in the market price indicates the elasticity of supply. Elasticity of supply can be defined as the degree to which the quantity of goods and services offered for sale changes in response to a change in the market price. Supply elasticity coefficient The elasticity of supply is measured by the elasticity coefficient. It is calculated as the ratio of the percentage change in the quantity of products offered to the percentage change in price. The formula for calculating the price elasticity coefficient of supply (Es) is: Es = ?QA :?P. Various variants of the intensity of such changes can also be attributed to one of three main cases: 1) elastic offer; 2) inelastic supply; 3) the offer of unit elasticity.  Supply curves with varying degrees of elasticity In addition, the elasticity of supply can also take extreme values - perfectly elastic and completely inelastic supply. The degree of elasticity of the proposal can also have a graphical interpretation. The figure shows various options for the elasticity of the supply curve. On fig. A) S1 - inelastic supply (E < 1); S2 - unit elasticity supply (E = 1); S3 - elastic supply (E > 1). On fig. B) S1 - absolutely inelastic supply (E = 0); S2 - perfectly elastic supply (E = ?). The time factor affecting the elasticity of supply. The elasticity of supply is influenced by various factors: the price of raw materials and the level of wages, the interest rate, the availability of spare production capacity, the nature of the product, for example, the supply of industrial products is more elastic than agricultural. A decisive factor in the elasticity of supply is the amount of time available to producers to respond to changes in the price of a commodity. Therefore, in the work of manufacturers, the following periods are distinguished: - the current period is the period during which the producer does not have the opportunity to adapt to the level of price changes; - the short-term period is the period during which producers do not have time to fully respond to price changes. Consequently, they do not have time to change production capacities; - long-term period - characterized by sufficient time for the manufacturer to fully adapt to price changes. 56. ELASTICITY OF SUPPLY OVER TIME Elasticity of supply is the degree to which the quantity of goods and services offered for sale changes in response to changes in market prices. The time factor in the elasticity of supply is the period during which the producer has the ability to adjust the quantity supplied to a change in price. There are three time intervals: 1) the shortest market period. It is so small that producers do not have time to respond to changes in demand and prices. During this period, all factors of production are constant. Consequently, the volume of supply is effectively fixed; 2) short-term period. During this period, production capacities remain unchanged, but the intensity of their use may change. In this case, some factors of production become variables (labor, raw materials, etc.); 3) long-term period. In this period, the manufacturer is given enough time to change production capacities. All factors of production become variables.  Time Factor and Supply Elasticity The figure shows how producers adapt to changing demand in different time periods and how the elasticity of supply changes with the change of periods. In the shortest market period (Fig. A), a change in demand will not cause a change in supply. The supply will be perfectly inelastic, since there will be no time to react to the offer. The increase in prices will correspond to an increase in demand (the scale of the upward shift in its curve). In the short and long term, with an increase in demand, the volume of supply will increase. At the same time, the price will also rise, but on a smaller scale than the increase in demand. The difference between the short run and the long run lies in the degree of elasticity of the curve. In the short term, it is small, since only a limited increase in production can be obtained by increasing capacity utilization. No matter how much additional raw materials are brought in, the productivity of the equipment processing it has its own ceiling. This situation is very relevant for Russia. After the liberalization of foreign economic activity, the export of many goods began to grow, including oil. However, upon reaching the level of 105 million per year, it stopped growing. This happened because the limiting factor in this area is the capacity of the oil pipeline. No matter how great the demand abroad is, oil pipelines cannot pump more than a certain indicator. In the long run, with a favorable change in demand, the increase in supply is almost unlimited. Therefore, the curve is highly elastic. The response to the increase in demand is a large increase in production. At the same time, the rise in prices is small (curve SL). It is likely that the price can remain unchanged (perfectly elastic supply curve). 58. PRACTICAL SIGNIFICANCE OF ELASTICITY OF DEMAND AND SUPPLY Supply and demand - interdependent elements of the market mechanism. Demand is determined by the solvent needs of buyers (consumers), and supply is determined by the totality of goods offered by sellers (manufacturers). The ratio between them develops into an inversely proportional relationship, determining the corresponding changes in the level of prices for goods. Elasticity - one of the most important categories of economic science. It was first introduced into economic theory by A. Marshall and represents a percentage change in one variable in response to a percentage change in another variable. The concept of elasticity allows you to find out how the market adapts to changes in its factors. It is usually assumed that the company, by raising the price of its products, has the opportunity to increase the proceeds from its sale. However, in reality this is not always the case. A situation is possible when a price increase will lead not to an increase, but, on the contrary, to a decrease in revenue due to a decrease in demand and a corresponding reduction in sales. Therefore, the concept of elasticity is of great importance for producers of goods, as it gives an answer to the question of how much the volume of demand or supply will change when the price changes. The theory of elasticity of supply and demand is of great practical importance. The elasticity of demand is an important factor influencing the pricing policy of the enterprise. Another example of the actual use of the theory of elasticity is the state tax policy, as well as the policy in the field of employment. The study of the concept of elasticity allows entrepreneurs to keep abreast of changing consumer preferences, respond in a timely manner to a dynamically changing market environment and respond accordingly. Importance of elasticity in microeconomic analysis. In economic practice, elasticity analysis allows: 1) determine the size of the production of individual goods and services; 2) study consumer behavior; 3) plan the pricing policy of the enterprise; 4) to form an enterprise strategy in the short and long term to maximize profits and minimize losses; 5) predict changes in consumer spending and entrepreneurial income due to changes in the price of goods and services. The practical value of the coefficient of elasticity. Conducting a reasonable pricing policy of an enterprise is unthinkable without understanding how lowering the cost of products can affect sales volumes, and hence revenue. There are different ways to calculate how the volume of sales of a particular product changes in response to a change in price. For example, in tons, pieces, etc. But all these approaches require additional information and by themselves say little. Estimating elasticity in percentage terms avoids confusion and builds a single indicator for all cases. This coefficient is called the coefficient of elasticity. It can be defined as the ratio of the percentage change in one quantity to the percentage change in another. 59. CONSUMER BEHAVIOR The essence of the concept of "need" is the economic motive of a person, arising from the need or desire to consume various objects of wealth (both material and spiritual). Classification of needs 1. Primary needs: food, sleep, clothing. 2. Secondary needs: self-expression, entertainment, spiritual development. Secondary needs are satisfied after the primary ones are satisfied. Primary needs cannot be replaced one by the other. Secondary needs can be replaced one for another within a more or less wide range. Only when the needs are realized, the motivation to work arises. In this case, the needs take on a real form - the form of interest. Economic interest is a form of manifestation of economic needs. Needs form demand, which largely depends on tastes and preferences. All people are able to compare the satisfaction they get from different activities and products, and to prefer some over others. This type of preference is called pure, since it does not depend on prices and incomes. Pure preferences do not yet represent actual purchasing choice. Desire becomes a choice, and an individual becomes a buyer, when his preferences lead to real purchases in the market. However, choice, unlike desire, is limited by price and income. The statement that people have preferences confirms the fact that they actually rank different goods and services according to their tastes. The structural element of ranking is a set of goods and services according to certain characteristics. Each set receives a consumer rating based on taste, experience, etc. Comparing any two bundles, the consumer may prefer one product to the other. Needs can change over time depending on mental development, education, environment, upbringing. Having established consumer preferences, economists make further preferences that bring consumer behavior closer to more realistic conditions. So, when choosing goods to buy, a person is limited by the amount of money that he can pay. Consumers cannot buy everything they want, so their options are limited by their budget. Of course, over a certain period of time, the consumer's expenses may differ from his income, since there is credit and personal savings. The process of consumption does not take place instantly, so the time factor plays a certain role in the study of consumer behavior. Since consumption takes a certain amount of time, it has a positive meaning for most people. Consumption-related costs are made up of two components: 1) cash costs for goods; 2) time spent on own consumption. The consumer does not need a microwave oven or a vacuum cleaner as such, but their services. Therefore (ceteris paribus), more purchased will be those goods that provide similar services in a shorter time. Theory of consumer behavior. Explains how buyers spend their income to maximize their needs. The theory of consumer behavior shows how the choice is influenced by the prices of goods, preferences, income. 60. RULES FOR MAXIMIZING PROFIT Profit maximization (loss minimization) is achieved at the volume of production corresponding to the equilibrium point of marginal revenue and marginal cost. This pattern is called profit maximization rule. The profit maximization rule means that the marginal products of all factors of production are equal in value to their prices, or that each resource is used until its marginal product in monetary terms is equal to its value. An increase in output increases the profit of the enterprise. But only if the income from the sale of an additional unit of output exceeds the cost of production of this unit (MR is greater than MC). On fig. 1, this conditionally corresponds to the output volumes A, B, C. The additional profits received as a result of the release of these units are highlighted in the figure by thick lines.  MR - marginal revenue; MC - marginal cost Rice. 1. Profit maximization rule When the costs associated with the release of one more unit of production are higher than the income brought by its sale, the enterprise only increases its losses. If MR is less than MC, then it is unprofitable to produce additional goods. In the figure, these losses are marked with thick lines above points D, E, F. Under these conditions, the maximum profit is achieved at the volume of production (point O) where the marginal cost curve in its increase crosses the marginal revenue curve (MR = MC). As long as MR is greater than MC, an increase in production yields an increasing smaller profit. When the ratio MR MC is established after the intersection of the curves, a decrease in production leads to an increase in profits. Profit rises as it approaches the point of equality between marginal cost and revenue. The maximum profit is reached at point O. Under perfect competition, marginal revenue equals the price of a good. Therefore, the profit maximization rule can be represented in another form: P=MC. On fig. 2, the profit maximization rule is applied to the process of choosing the optimal output for three critical market situations.  Rice. 2. Optimization of the volume of production in terms of maximizing profits A), minimizing losses B), and stopping production C). Under perfect competition, profit maximization (loss minimization) is achieved at a volume of production corresponding to the point of equality of price and marginal cost. Rice. 2 shows how the choice occurs under conditions of profit maximization. The profit-maximizing firm sets its output at the level Qo, corresponding to the intersection point of the MR and MC curves. In the figure, it is indicated by the point O. 61. INCOME EFFECT AND SUBSTITUTION EFFECT The same consumer can afford to buy more of the cheaper product. income effect - this is a change in demand for any product only due to fluctuations in the purchasing power of the cash flow caused by price changes. For example, the income effect of a decrease in the price of vegetables will necessarily manifest itself in the demand for this product. Demand is driven by an increase in the purchasing power of income as a result of the fall in the price of vegetables. It must be remembered that rising income stimulates demand for normal goods and reduces the demand for inferior goods. A normal good is a good for which demand increases with an increase in income and a fixed price. A low-quality good is a good whose demand falls as the real income of the consumer rises. However, other factors remain unchanged. A price change can have a different effect on the quantity demanded than the income effect. The cheaper commodity "takes" part of the demand, which would otherwise be directed to the purchase of another commodity. Such a phenomenon is called substitution effect. The influence of the substitution effect on demand is determined by the following factor: the new price of a good will be lower or higher relative to the prices of other goods. The substitution effect from a change in price is that share in the changed volume of demand, which is a consequence of a change in the relative price and is not related to the dynamics of real income. If a buyer has the choice between two goods, he will buy more of the good whose relative price has fallen and less of the good whose relative price has increased. As a result, when the price of good A increases relative to the price of good B and real income remains fixed, then the consumer will purchase less of good A and more of good B. If the consumer takes into account only the substitution effect, then a decrease in price always increases demand, and an increase price always reduces it. In the case of normal goods, the income effect and the substitution effect add up as there is an expansion in the consumption of normal goods. The substitution effect prevails in the market for the most part. In what situation can the income effect prevail over the substitution effect? Of course, not in the one when the product (for example, porcelain dishes) occupies a relatively small part in the budget of a particular consumer. A fall in the price of china will make the consumer not much "richer" and create a relatively small income effect. However, the demand curve can also be positively sloping if low-quality goods make up a significant portion of the consumer's budget. There is an opinion that a change in price causes a substitution effect, and a change in income leads only to an income effect. This is a false statement, since any change in market price can cause both an income effect and a substitution effect. The substitution effect and the income effect allow you to determine the change in demand when the prices of goods and services rise or fall. 62. EMPLOYMENT AND UNEMPLOYMENT According to the structure, they distinguish industry, professional и qualifying employment, as well as by sector of the economy. Scientific and technological progress affects the change in the structure of employment. A high level of employment also ensures the corresponding incomes of the main part of the population. In this regard, it should be noted that the category of "full employment" is unacceptable for a market economy, including for quite "natural" reasons. Firstly, a significant part of workers during their labor activity, for various reasons, changes their place of work of their own free will. At the same time, before entering another place of work, one or another period of time may elapse during which these persons are classified as unemployed. This category constitutes the so-called frictional unemployment. Secondly, scientific and technological progress is constantly rebuilding the structure of production, and in this regard, the problem arises that the qualification structure of the labor force does not correspond to the needs of production. As a result, for every unemployed due to the closure of "old" industries, there may be only a few vacancies in "new" industries. This phenomenon is called structural or technological unemployment. To overcome it, both the state and private firms are creating a network of retraining centers. Thirdly, the cyclical development of a market economy leads to a reduction in the demand for labor during periods of depression and crisis. Accordingly, there is cyclical unemployment. It is not possible to eliminate this type of unemployment, since it is impossible to cancel the cyclical nature of economic growth. Another thing is that anti-crisis measures can "smooth out" the economic downturn and, accordingly, reduce the number of temporarily laid off workers. Fourth, there is hidden unemployment, which arises from seasonal work, especially in construction and agriculture. An urgent problem in connection with unemployment is the migration of labor force, which comes in two forms: internal and external. At the same time, the export of labor is more effective than the export of goods. Immigrant labor is now widely used. But in most countries, the process of labor migration is placed under the control of the state. Entrepreneurs must coordinate the issues of hiring foreigners with government agencies. So, in Germany, you need to obtain a special permit. Unemployed These are unemployed people who are actively looking for work. The unemployment rate is defined as the ratio of the unemployed but willing to work population to the labor supply. Unemployment can be measured by the following indicators: 1) the unemployment rate; 2) the average duration of unemployment; 3) the natural rate of unemployment. This is the proportion of the unemployed that corresponds to the appropriate level of full employment in the economy. In modern conditions, the natural rate of unemployment is 5,5-6,5%. There are several types of unemployment. 1. Voluntary unemployment is people who are better off not working than receiving the wages offered. 2. Forced - such unemployment, which occurs in conditions of a fixed salary. 63. FUNCTIONS OF THE STATE AND FUNCTIONS OF STATE BODIES The functions of the state must be distinguished from the functions of its separate body. This problem has two meanings: theoretical and practical. In theoretical terms, the solution of the question raised deepens knowledge about the functions of the state. In practical terms, a certain distinction between these concepts is aimed at improving the structure and daily activities of state bodies. Functions of the state - such areas of activity of the state, in which its essence as a social phenomenon is directly expressed. Functions of state bodies they cannot possess such a quality; in them the essence of the state does not receive direct expression. The functions of the state are performed by all or many state bodies, but often individual bodies play a priority role in the implementation of any state function. The functions of bodies are usually understood as their specific goals and powers (competence). The functions of a state body and its competence are not coinciding concepts. The functions of state bodies represent separate directions in the content of their practical activities. Competence is the expression of functions in the authority of the body, its rights and obligations, i.e. legal establishment of their scope and boundaries. Thus, the functions of state bodies are a legal concept. Their content depends on the volitional institutions of the state, which are determined by objective reality, the material conditions of society. Nevertheless, the content of the functions of state bodies is established and changed by the state represented by the same bodies and their officials. Unlike the functions of state bodies, the functions of the state act as a political and philosophical concept. They are objective in nature and do not depend on the will of people. The state cannot face the question of whether or not to exercise its functions. Their implementation is obligatory and necessary for the existence and development of any state, since its essence, its inner nature is expressed in functions. The functions of state bodies in their content are subordinate to the functions of the state, their goals and requirements. Therefore, the activities of state bodies must be strictly coordinated with the functions of the state. This rule applies to laws and other normative acts that formulate the rights and obligations of state bodies, i.e. their functions. The concept of the functions of state bodies is not identical with the concept of specific actions of these bodies. The functions of state bodies are closer to specific activities than the functions of the state itself. However, no matter how close the functions of state bodies are to their practical activities, these concepts are not equivalent to each other. Specific actions of state bodies mean the exercise of their powers, i.e. implementation of their functions, not the functions themselves. It follows from this that the functions of state bodies are a general concept in relation to their practical actions. However, it is more specific than the concept of the functions of the state. Consequently, the functions of state bodies are located between the functions of the state and its practical activities. 64. LABOR MARKET The essence of the labor market. The labor market is a system of social relations associated with the hiring and supply of labor, or with its purchase and sale. The labor market is a system of social relations designed to ensure the normal reproduction and efficient use of the commodity "labor force". The labor market performs the functions of a mechanism for the distribution and redistribution of the labor force by spheres and sectors of the economy, types and forms of activity. The main elements of this mechanism: 1) the supply of labor force allows you to determine the number and composition of various categories of citizens entering the labor market (by gender, age, education, professions, qualifications, etc.). These include: - laid-off workers, the contingent of which is formed due to a fall in production, a reduction in funding from the state budget, and the transformation of the public sector; - young people who do not continue further studies or who do not go to work after graduating from educational institutions; - persons released from places of deprivation of liberty; - dismissed due to staff turnover; - migrants of working age; 2) the demand for labor. The sustainability of the demand for labor will depend on: - productivity in the creation of goods (services); - from the market value of the goods produced with its help. As a result of the action of economic factors, there is a reduction in the need of enterprises in the public sector of the economy for workers. At the same time, the development of the non-state sector of the economy is accompanied by an increase in the number of employees; 3) the ratio of demand and supply of labor. When considering this indicator, the following are determined: - the tendency for supply to exceed demand, - imbalance of supply and demand, caused primarily by the violation of economic ties, contractual obligations and financial difficulties. The value of the labor market. The labor market sets in motion all other markets, resources, because here it is formed and distributed among professions, enterprises, regions and industries and the most important national resource, the labor force, is put into action. Through the labor market, the employment of the economically active population is ensured, its inclusion in the production and service sectors, and the possibility of obtaining the necessary income is created. Through the market comes the acquisition of enterprises with the necessary labor force, in the required quantities and of the proper quality. The labor market shows which professions are needed and which are in excess, what job seekers should do in their training, retraining, expanding existing knowledge and skills to get a job. In connection with the above, it can be seen that the labor market is an important source of information. The market, through the competition of hired workers, stimulates them to expand their professional skills, improve their qualifications and universalize. The labor market regulates the flows of labor that develop on it. The labor market ensures the distribution and redistribution of the economically active population in connection with structural changes in the economy. 65. LAND MARKET Land is one of the main factors of production. Under the earth as a resource is understood not only the earth itself, but also all the natural resources located on it. features of the land market. A feature of this market is the limited (sometimes impossible) reproduction. Due to the limited nature of this resource, land ownership is the most profitable type of property. The economic realization of this type of property is most often carried out not through its sale, but through leasing and receiving income in the form of rent. Rent is payment for the use of land. Problems of the land market. With Russia's huge land potential, large-scale paid land privatization is constrained by the low solvency of Russian citizens and enterprises. Attempts to solve this problem through free transfer or through the issuance of land privatization checks are also fraught with serious negative consequences. Mass speculation in land and land checks cannot be avoided. Property rights to land after some time will be concentrated in the hands of large banks and foreign legal entities. At the first stage, both in the agricultural and industrial sectors, as the main form of land use, the lease of land with the right to its subsequent redemption, with the control of state bodies over its use, can be retained. At the same time, land reserves should be purposefully sought for solving key tasks, such as housing and summer cottage construction, suburban gardening, farming, industrial and other construction. To create such reserves, procedures should be developed and legalized for the seizure of land from unprofitable collective farms and state farms with declaring them bankrupt, the seizure of land from those enterprises and organizations that do not provide the standard terms for the development of sites previously provided to them for construction or other purposes. It is these lands that should become the source of open auction and competitive sale, which will actually fill the federal and local budgets not with symbolic amounts or privatization checks, but with full-weighted money. Purpose of the labor market Land as an indispensable factor of production has a number of significant features: 1) limited land plots; 2) the dependence of the effectiveness of their use on the location, natural properties, terrain; 3) features and in the legal regime of land use, including their purpose, encumbrances and restrictions on their use. According to their purpose, lands are usually divided into seven categories: 1) lands of settlements; 2) agricultural; 3) industry; 4) environmental protection; 5) water fund; 6) forest fund; 7) stock. Land tax. The higher the value of the land, the greater the amount of tax on it. It is from this tax that goes to the local budget that the construction of roads, the creation of infrastructures and much more is paid. If the owner is not able to effectively use his property, then the tax is excessively large. The property has to be sold. The old owner gets market value for it, someone else will be willing to pay a high tax, ensuring more efficient use. 66. CAPITAL MARKET Capital is the value put into circulation for the purpose of making a profit. Every business starts with capital. If there is no own capital, then you can buy the right to use money capital. Loan interest is the price paid for the use of borrowed money. Money in itself is not a production resource, but using it, you can purchase equipment, energy and other resources necessary to start production. Thus, an individual, taking monetary resources for use, provides himself with the conditions for the development of production. The loan interest rate is a very important stimulus for high growth rates of the national product and the development of certain industries. At a lower interest rate, investments in production increase and the volume of the production product and income in society increase. Borrowed capital is invested in production and should bring income. But a positive result is possible only if this capital is optimally combined with an individual factor of production - entrepreneurial activity. The functioning of this factor of production implies a certain degree of remuneration. What is it expressed in? Let us first consider the essence of the term "entrepreneurial activity". A certain entrepreneur decided to create his own business. His work in the scheme will be as follows. The entrepreneur takes the lead in combining the various factors of production in the most optimal combination. He makes economic decisions as his business develops in various matters. After the entrepreneur is looking for new opportunities in economic activity, he invests his own or borrowed funds. In the latter option, he assumes economic responsibility, since in this case the risk of monetary losses is high. The entrepreneur receives profit from his activities in the form of income. Income acts as a monetary realization of the economic interest of the entrepreneur. The use of a monetary resource is estimated as an internal cost of the enterprise. The monetary value of the ability of the entrepreneur is made on the basis of the profit he receives in comparison with what he could have had by using his strength in another way. The activity of an entrepreneur in any area brings him profit, which is called nominal. Nominal profit - is the amount of payment for a certain type of activity. After the withdrawal of nominal profit, the company remains net profit. The entrepreneur also claims this type of profit, since for him it is payment for the risk to which his capital has been exposed. Risk in business is inevitable. It is the risks that determine the assignment of net profit by the entrepreneur, since otherwise all losses fall on him. Profit in business is the main factor in the further development of activities. It stimulates an increase in production volumes, since with an increase in the volume of products sold, the mass of profit also increases. On the other hand, additional costs for improving the production process guarantee the entrepreneur an increase in profits. 67. STAGES OF THE MOVEMENT OF THE PUBLIC PRODUCT Stages of social product movement: 1) production - the process of creating tangible and intangible goods necessary to meet various social needs, where the combination of factors of production - labor, capital, land and entrepreneurial ability - takes place. The concept of "production" in the ordinary state is associated with the process of manufacturing, the creation of certain material goods, but in the economy it has a broader content. Economists understand production as any activity for the use of resources, including the resources of the person himself, to obtain tangible and intangible benefits. The theory of production studies the relationship between the amount of resources used and the volume of output. The methodological theory of production is largely symmetrical to the theory of consumption. The difference is that its main categories are of an objective nature and can be measured in certain units of measure; 2) distribution - the stage of social production, at which the share of each participant in the produced product is determined; 3) exchange - ensuring continuous communication of production. The product for itself is natural farming. The product for exchange is the trading economy (money); 4) consumption - the use of the product in the process of satisfying needs. Consumption generates a need, the importance of which is much broader and deeper than the role of utility. The essence of the category "need" is the economic motive of a person, arising from the need or desire to consume various material and spiritual wealth. The desire to consume any product or service has a different degree of intensity. However, it is not possible to quantify the need. We are talking about an "intense" value, which can only be perceived in terms of "less" or "more". The prerequisites for consumer behavior can be formulated as follows: 1) consumers have a clear idea of their preferences and always prefer more to less; 2) consumers act rationally; 3) consumers know exactly the level of their income; 4) the choice of consumers is limited by their income and time. Consumer Behavior Theory explains how consumers spend their income in order to maximize their own needs. This theory shows how consumer choice is influenced by prices, income, preferences. Consumer Behavior Theory assumes that consumers who have a choice behave rationally. Buyers always choose the bundle that best suits their preferences given the constraints on revenue and retail prices. Rationality means that consumers will never reject a set of products they can purchase if those sets bring them the greatest satisfaction. Of course, consumers can also act according to a different, non-traditional system. But not individual buyers, but their totality tend to act rationally. This trend allows us to analyze the behavior of consumers, taking into account the assumption of the rationality of their behavior. 68. FACTORS OF PRODUCTION, THEIR INTERACTION AND COMBINATION Factors of production are the resources necessary for the production process. Exist four main factors of production: 1) labor. This is the economic activity of people aimed at generating income and satisfying needs. In the process of labor, a person spends physical and mental energy. In various types of labor, intellectual labor or physical labor may predominate. Labor can be simple or complex, skilled or unskilled. The result of labor can be a material (a residential building, a parking lot, a bridge over a river) or an intangible product (for example, information, a service); 2) capital. These are means of production of durable or short-term use (raw materials, machinery, equipment, structures). Separately allocate money capital - financial resources intended for transformation into real. Money itself is not a factor of production, but plays a significant role in the activities of the enterprise; 3) land (natural resources). Earth is any place where a person is (rests, works, etc.). There are various enterprises on the ground. The earth is a source of minerals, natural resources. Land as an economic factor takes into account all these functions of natural factors in the economy; 4) technical progress. Industrial installations may have the same cost, but one of them may be new and the other obsolete. If other factors of production are the same, then the best economic results will be achieved by an enterprise using modern equipment; 5) information. In connection with the widespread use of computer technology, information begins to play a significant role in production. Ownership of information helps the company to carry out its activities more efficiently. Interaction and combination of factors of production. Production requires certain resources that are used in the right combinations. All resources cannot participate in production in isolation. They interact only in certain combinations. All of them complement each other. At the same time, they interact. For example, machinery and equipment can be replaced by the labor of workers, natural materials can be replaced by artificial ones. When one type of resource becomes more expensive for some reason, they try to replace it with a cheaper one, and accordingly, the demand for it increases. An increase in demand can lead to an increase in the price of a particular resource. Therefore, a change in the price of one of the resources leads to a change in the prices of other resources. The supply of factors of production primarily depends on the specifics of each market. Depending on the factors of market development, an offer is formed. However, common to all markets is that the amount of resources offered for sale is limited in comparison with the needs in their production. For the manufacturer, market prices are of great importance. It is on them that the level of production costs depends. Given the technical base, prices will determine the amount of resources that can be used. 69. CONCEPT OF THE FIRM The company - is a separate techno-economic and social complex, designed to produce benefits useful to society in order to make a profit. A firm is a name under which enterprises (or their associations) act in economic activities as an independent economic entity. In the economy, the name plays an important role. It creates a special image of an economic entity, helps to strengthen its position in the struggle for quality, and brings considerable profits. The conquest of a firm position in the market of a particular product often brings it additional profit by selling the right to use its brand name. This is what the franchising system is based on. Franchise - a license that gives the right to a private company to operate as part of a large distribution network. Using the name of the company is beneficial to the buyer of the franchise, behind which there is advertising, reputation. Although most firms have only one enterprise (in this sense, these concepts are the same), many firms own and operate several enterprises, and therefore act as various associations of horizontal (a chain of retail stores) and vertical (enterprises of various stages of the production process) type. The goal and motive of the firm is to maximize profits. Making a profit in a market economy is possible only if the production is necessary for the consumer products. A firm that produces goods and services necessary for society forms the material and social conditions for the life and development of society. The firm as an economic system is the main link where the direct solution of the main economic problem takes place. It provides jobs, pays salaries, participates in the implementation of social programs. Firm classification Allocate firms operating in the field of material and non-material production. Economic entities in the sphere of material production are construction, transport, etc. A distinctive feature of economic entities in the sphere of non-material production is that they create special products and services (household, cultural, social). According to the nature of the impact on the objects of labor, economic entities are divided into mining and processing. According to the type of production, economic entities are single, serial and mass production. Single production is characterized by a wide range of products and a small output. Serial production is characterized by the production of a limited range of products. Mass production is characterized by the production of certain types of products in large quantities. According to the number of types of manufactured products, specialized ones are distinguished, i.e. producing a limited number of goods, and diversified - producing different goods. According to the economic purpose, firms are divided into producing means of production and producing consumer goods. Depending on the size of the company are divided into large, small and medium. 70. DEFINITION OF MARKET STRUCTURE AND MARKET POWER The market is a system of separate interconnected markets and has its own structure. Market structure - this is the internal structure, location, order of individual elements of the market, their share in the total volume of the market. Market structure classification: 1) according to the economic purpose of objects of market relations: - market of goods and services; - market of means of production; - labor market; - investment market; - financial market; 2) by geographical location: - local market; - regional market; - national market; - world market; 3) according to the degree of restriction of competition: - monopolistic market; - oligopolistic market; - market of monopolistic competition; - market of perfect competition; 4) by industry: - automotive market; - computer market; - textile market; - market of agricultural products; 5) by the nature of sales: - wholesale market; - retail market. Some of the selected markets are also heterogeneous and have their own structure. Thus, the commodity market includes the consumer market (the market for essentials, the market for durable goods, etc.), the market for investment goods (production goods) and the information market. No less many-sided and diverse is the financial market, where the subject of sale and purchase is money provided for use in various forms. The financial market consists of an investment market (long-term capital investments), a credit and loan market, a securities market (primary, associated with the issue of securities, and a secondary one, intended for their redistribution), monetary (national currency) and foreign exchange markets. A developed market requires a developed infrastructure. Market power is the ability to influence the price of a product. One of the manifestations of market power is a monopoly. Monopoly - this is an exclusive right in a certain area of the state, organization, firm. Monopoly enterprises are large economic associations that are privately owned and exercise control over industries, markets and the economy. Monopoly activity is carried out on the basis of a high degree of concentration of production and capital in order to establish monopoly prices and make profits. The main sign of a monopoly formation (monopoly) is the occupation of a monopoly position. The latter is defined as the dominant position of the entrepreneur, which enables him, alone or together with other entrepreneurs, to limit competition in the market for a particular product. 71. TYPES OF MARKET STRUCTURES The presence of a developed market structure is a prerequisite for the normal functioning of the country's market economy. The market has a complex structure, and market relations occur in markets of various types. On the consumer goods market consumer goods (food, clothing) are used. Households are buyers, enterprises are sellers. On the land market trade in land plots, residential and non-residential buildings. Under the earth as a resource is understood not only the earth itself, but also the natural resources located on the earth and in its bowels. On the labor market buyers offer jobs and sellers offer labor. Demand and supply in the labor market largely depend on the price of the goods offered. The law of demand and the law of supply apply here. Income from labor activity makes up 80% of the national income. Capital market exists in two forms: monetary and real (investment product). The capital market is understood as investment funds in cash, which can subsequently be used to purchase investment goods. Demand and supply for capital are also manifested in the credit and financial markets. Consumer Goods Market is currently represented by a wide range, saturated with goods. The problem of shortages, queues, coupons is a thing of the past. Stores have acquired an original design, working hours have increased. All this testifies to the maturity of the consumer goods market. Disadvantages of market structures. The disadvantages include the predominance of imported goods. This leads to economic dependence of the country. The devaluation of the ruble in 1998 increased the prices of all imported products. The investment goods market is in a difficult position. Some of the raw materials were exported abroad. In the context of the economic crisis, the demand for investment goods is very low. And in the part in which it exists, demand is directed primarily to imported goods. Premises are being actively sold (rented) on the real estate market. So far, land plots practically cannot be an object of purchase and sale. In this industry, the rental of industrial, residential, office premises has become widespread. The labor market is seriously skewed on the supply and demand side. The restructuring of the economy requires changes in employment. The closure of mines, the mass resignation of the military requires a large-scale retraining of the workforce. This process is hampered by poor labor mobility. People left without work somewhere in the North often do not have the opportunity to return to the central regions of the country. The problem is the lack of information about the proposed vacancies. Competition - an essential condition for the development of market structures. Its features are expressed in the fact that the market: 1) is not monopolized by the state or a private company; 2) legally backed by law protecting the rights of private property; 3) implies a variety of forms of ownership, where, along with state-owned enterprises, private and joint-stock enterprises operate. 72. OPTIONS OF FIRM EQUILIBRIUM IN THE SHORT AND LONG TERM Equilibrium means such a state of the market, which, at a certain price, is characterized by an equilibrium of supply and demand. Firm equilibrium in the short run. Under perfect competition, a firm cannot influence the price of the product it sells. Its only opportunity to adapt to market changes is to change the volume of production. In the short run, the number of individual factors of production remains unchanged. Therefore, the stability of the firm in the market, its competitiveness will be determined by how it uses variable resources. There are two universal rules that apply to any market structure. The first rule states that it makes sense for a firm to continue functioning if, at the achieved level of production, its income exceeds variable costs. The firm should stop production if the total income from the sale of goods produced by it does not exceed variable costs (or at least not equal to them). The second rule determines that if the firm decides to continue production, then it must produce such a quantity of output at which marginal revenue equals marginal cost. Based on these rules, we can conclude that the firm will introduce such a number of variables that, at any volume of production, equalize its marginal cost with the price of the goods. In this case, the price must exceed the average variable costs. If the price on the market of the goods produced by the firm and the cost of production remain unchanged, then it makes no sense for a profit-maximizing firm to either reduce or increase production. In this case, the firm is considered to have reached its equilibrium point in the short run. Firm equilibrium in the long run. The equilibrium conditions for a firm in the long run are: 1) the marginal cost of the firm must be equal to the market price of the goods; 2) the firm must earn zero economic profit; 3) the firm is not able to increase profits by unlimited expansion of production. These three conditions are equivalent to the following: 1) firms in the industry produce output in volumes corresponding to the minimum points of their average total cost curves in the short run; 2) for all firms in the industry, their marginal cost of production is equal to the price of the good; 3) firms in the industry produce output in volumes corresponding to the minimum points of their average cost curves in the long run. In the long run, the level of profitability is the regulator of the resources used in the industry. When all firms in an industry operate at minimum cost in the long run, the industry is said to be in equilibrium. This means that at a given level of technology development and constant prices for economic resources, each firm in the industry completely exhausts its internal reserves for optimizing production and minimizes its costs. If neither the level of technology nor the prices of factors of production change, then any attempt by the firm to increase (or decrease) output will result in losses. 73. PRODUCTION COSTS, THEIR ESSENCE AND CLASSIFICATION Essence of production costs. In the process of producing goods and services, living and past labor is expended. At the same time, each company seeks to obtain the highest possible profit from its activities. To do this, the company tries to reduce its production costs, i.e. production costs. Production costs are the total labor costs of producing a good. Cost classification: 1) explicit costs - these are opportunity costs that take the form of direct (cash) payments to suppliers of factors of production and intermediate products. Explicit costs include salaries paid to workers, salaries of managers, commissions to trading firms, payments to banks and other financial service providers, fees for legal advice, transportation costs, etc.; 2) implicit (internal, implicit) costs. These include the opportunity cost of using resources owned by the firm's owners (or owned by the firm as a legal entity). These costs are not covered by contracts that are binding for explicit payments, and therefore remain under-received (in cash). Firms usually do not record implicit costs in their financial statements, but this does not make them any less real. 3) fixed costs. The costs associated with providing fixed costs are called fixed costs. 4) variable costs. They can quickly and without much difficulty be subject to change within the enterprise as the volume of output changes. Raw materials, energy, hourly wages are examples of the variable costs of most firms; 5) sunk costs. Sunk costs have a distinctive feature that will allow them to be distinguished from other costs. Sunk costs are incurred by the firm once and for all and cannot be recovered even if the firm completely ceases its activities in this area. If a firm plans to start in some new line of business or expand its operations, then the sunk cost associated with this decision is precisely the opportunity cost associated with starting a new activity. As soon as the decision to implement costs of this kind is made, sunk costs cease to be alternative for the company, because it once and for all lost the opportunity to invest these funds anywhere; 6) average cost - cost per unit of output. They are used to form prices. Average fixed costs are determined by dividing total fixed costs by the amount of output produced. Average variable costs are determined by dividing the total variable costs by the amount of output produced. Average total cost can be calculated by dividing the sum of total costs by the quantity of output; 7) marginal cost - additional or additional costs associated with the production of one more unit of output. Marginal cost helps determine the marginal workload above which production is not efficient. Using marginal cost, you can determine the minimum effective size of the enterprise; 8) distribution costs - the costs associated with the delivery of products to the consumer. 74. MARKETING Marketing is - a type of human activity aimed at meeting needs and requirements through exchange. Concept marketing is based on seven constituent elements: 1) needs. The basic idea behind marketing is the idea of human needs. Need is a feeling of lack of something. Human needs are varied and complex. Among the main ones are the needs for food, clothing, sleep, self-expression, communication, etc. If the need is not satisfied, the person feels destitute and unhappy. And the more this or that need means to him, the more deeply he worries; 2) needs. Need - a need that has taken a specific form in accordance with the cultural level and personality of the individual. Needs are expressed in objects that can satisfy the need in a way that is inherent in the cultural structure of a given society. As society progresses, so do the needs of its members. People are faced with more and more objects that awaken their curiosity, interest and desire. Manufacturers, for their part, take targeted actions to stimulate the desire to own goods. They are trying to form a connection between what they produce and the needs of the people. The product is promoted as a means of satisfying one or a number of specific needs; 3) requests. Demand is a need backed by purchasing power. The needs of people are almost unlimited, but the resources to meet them are limited. So a person will choose those goods that will give him the greatest satisfaction within his financial capabilities; 4) products. A product is anything that can satisfy a want or need. For example, a woman feels the need to look beautiful. All products that can satisfy this need, we call the product range of choice. This range includes cosmetics, new clothes, spa tanning, beautician services, plastic surgery, etc. Not all of these goods are desirable to the same degree. Most likely, goods and services that are more accessible and cheaper, such as cosmetics, clothes or a new haircut, will be purchased first; 5) exchange. Marketing takes place when people decide to satisfy their needs and wants through exchange. Exchange - the act of receiving from someone the desired object with the offer of something in return; 6) deal. A transaction is a commercial exchange of value between two parties. The transaction assumes the presence of several conditions: 1) two valuable objects; 2) agreed conditions for its implementation; 3) the agreed time of completion; 4) the agreed venue. As a rule, the terms of the transaction are supported and protected by law. A transaction should be distinguished from a mere transfer. In a transfer, party A hands over object X to party B without receiving anything in return. Transfers relate to gifts, subsidies, charity events, and are also one of the forms of exchange; 7) the market. The concept of "transaction" brings us directly to the concept of "market". Market - a set of existing and potential buyers of goods, the sale of marketable products. 75. ACCOUNTING COSTS Essence of accounting costs. The value of the resources used in production can be expressed by the price at which the enterprise acquired them on the market. In this case, the costs represent the amount of payments that the company made to suppliers and its employees. All payments must be recorded in accounting documents. This method of measuring costs is called accounting. The estimated costs are called accounting costs. The structure of accounting costs. The main items that are included in accounting costs: 1) labor costs (wages to employees, payments under contracts, etc.); 2) material costs (raw materials, materials, energy, fuel, components, etc.); 3) depreciation - deductions according to the current legislative norms in the field of depreciation of equipment, buildings, structures; 4) deductions for social needs (pension, medical, insurance funds); 5) other expenses (commission payments to the bank, loan interest, lease payments, taxes). The essence of the accounting approach to estimating the cost of resources is to answer the question: how much will the company pay to produce this good? This is a retrospective assessment based on accounting for the transactions carried out by the enterprise. The amount of accounting costs. Knowing the exact size of accounting costs serves as a reference point for finding out whether the enterprise is profitable or unprofitable. To do this, it is enough to compare accounting costs with the amount of company income. The economic meaning of such accounting analysis is very important. Only enterprises that are profitable in the long term are able to maintain their place in the market. Long-term losses lead to inevitable bankruptcy. The methodology for calculating accounting costs is standardized and therefore applicable for an objective assessment of the state of affairs of an enterprise. In Russia, an accounting standard that is mandatory for all enterprises is established by law and controlled by the tax and banking industries. A planned economy differs from a market economy, and therefore accounting in our country differs from accounting in other countries. However, in recent years, the main trend in the development of accounting in Russia is to bring its rules closer to world standards. The level of accounting costs does not always allow you to correctly judge the financial condition of the enterprise. Only in a competitive market is the price capable of performing an informational function. Therefore, an accurate measurement of costs is possible only when all the resources expended are valued at their market price. This doesn't always happen. The disadvantage of the accounting method is that it includes the costs of only those resources that the company acquires from outside (raw materials, materials). They are called explicit costs. Explicit costs are reflected in cash payments from the accounts of the enterprise to resource providers. Some resources may already be owned by the enterprise. They do not need to be purchased, which means that the corresponding costs are not reflected in the accounting documents. The costs of these resources are called implicit costs. 76. COSTS IN THE SHORT TERM In the process of producing goods and services, living and past labor is expended. At the same time, each company seeks to obtain the highest possible profit from its activities. To do this, each company has two ways: try to sell its product at the highest possible price or try to reduce its production costs, i.e. production costs. Depending on the time spent on changing the amount of resources used in production, there are short-term and long-term periods in the activities of the company. Short-term - this is the time interval during which it is impossible to change the size of the manufacturing enterprise owned by the company, i.e. the number of fixed costs incurred by the firm. Over a short time period, changes in output can result solely from changes in variable costs. It can influence the course and effectiveness of production only by changing the intensity of the use of its capacities. During this period, the company can quickly change its variable factors - the amount of labor, raw materials, auxiliary materials, fuel. In the short run, the quantity of some production factors remains unchanged, while the quantity of others changes. Costs in this period are divided into fixed and variable. This is due to the fact that the provision of fixed costs is determined by fixed costs. fixed costs. Fixed costs got their name because of their nature of immutability and independence from changes in the volume of production. However, they are classified as current costs, because their burden lies on the firm daily if it continues to rent or own the production facilities it needs to continue its production activities. When these current costs take the form of periodic payments, they are explicit monetary fixed costs. If they reflect the opportunity costs associated with owning one or another production facility acquired by the firm, they are implicit costs. On the graph, fixed costs are depicted by a horizontal line parallel to the x-axis (Fig. 1).  Rice. 1. Fixed costs Fixed costs include: 1) the cost of wages of management personnel; 2) rent payments; 3) insurance premiums; 4) deductions for depreciation of buildings and equipment. variable costs In addition to fixed costs, firms also incur variable costs (Fig. 2.). Variable costs can quickly change within an enterprise of a given size as output changes. Raw materials, energy, hourly wages are examples of the variable costs of most firms. It depends on the specific situation which costs are fixed and which are variable.  Fig 2. Variable costs 77. PRODUCTION COSTS IN THE LONG TERM The long-term time interval is the time interval, the size of which is sufficient to allow changes in the production capacity of the enterprise. The peculiarity of changes in costs and production costs in the long run gives rise to the need to analyze these costs and costs on the basis of long-term average and marginal costs. Long run average cost - this is the cost per unit of output, it is possible to change all factors of production in an optimal way. The pattern of change in long-term average costs is their initial decline with the expansion of production capacity and growth in production. However, as a result, the introduction of more and more capacities will lead to an increase in long-term average costs. A graphical expression of the relationship between unit production costs and output over a long period of time is the long-run average cost (LAC) curve. The long run average cost curve is the envelope of all possible short run average cost curves. It has points of contact with each of them without crossing them. In addition, each short-term average cost curve corresponds to an obstacle, the size of which is greater than the obstacle.  Change in average costs in the long run Long run average cost and scale of production. The long-run average cost curve shows the minimum long-run average cost of producing each output when all factors are variable. Movements along the long-run average cost curve, during which the freedom to choose the volumes of all types of costs used, are called changes in the scale of production. With a change in the scale of production, long-run average costs also change. If, in any range of output, long-run average costs decrease with an increase in output, then there is an economy (due to an increase in the scale of production). If, in any range of output, long-run average costs increase with output, then there is a loss. If, over a range of output, long-run average costs do not change with output, then there is a constant effect of a change in scale. The condition for reducing all costs is always measures such as: 1) improvement of production processes at the enterprise; 2) saving and rational use of resources; 3) growth of labor productivity; 4) availability of modern equipment; 5) careful study of consumer behavior. 78. PROBLEMS OF SMALL BUSINESS IN RUSSIA Small businesses are a dynamically developing sector of the Russian market economy. Problems of small business in the manufacturing sector. The development of small business in the manufacturing sector has not yet received productive development. About half of small enterprises in our country are engaged in trade. Such type of informal small business as shuttle trade has become widespread. The share of shuttle imports is 10% of total Russian imports. The following prerequisites contributed to the emergence of shuttles: - demand for imported goods; - low transaction costs for products imported by small firms and shuttles; - the presence on the Russian market of a huge layer of middle-income and low-income people, who later became regular customers of the shuttles. Problems of small business in the field of taxation. The most serious barrier is the high nominal tax burden faced by businesses under the current legislation. Small business entities in the Russian Federation can carry out their activities under one of three tax regimes: 1) the standard tax regime in which all enterprises operate; 2) simplified system of taxation; 3) the system of taxation in the form of a single tax on imputed income. However, despite a number of positive developments, the tax legislation contains the following serious shortcomings. VAT and strict criteria for the entry and exit of the enterprise from the simplified taxation regime. Unsettled part of the problem related to the collection of VAT. Many small businesses would prefer to pay VAT so that buyers - legal entities have the opportunity to take over these amounts for deduction. Otherwise, buyers - legal entities will prefer to buy the same goods from an enterprise that is a VAT payer. This reduces the competitiveness of an enterprise that has switched to a simplified system. It would be reasonable to allow enterprises to keep records and determine VAT according to general rules and pay it as part of the share of the single tax transferred to the federal budget. The total amount of the single tax would remain unchanged. Too low income. With such a bar of income, the organization has the right to switch to a simplified system (11 million rubles for the first 9 months of the current year). With an income of 15 million rubles. in a year the organization loses the right to use it. Income in this case is applied without deducting expenses. This means that the adopted legislation contains a severe limiter for the possible growth of the enterprise. Having reached a certain limit, the enterprise immediately loses the right to apply preferential taxation, which it can return to itself only after two years. At the same time, it is not taken into account that the transition to a new system of accounting and taxation in itself is a time-consuming and costly process. The correct development of the small business sector is also hampered by such problems as: 1) administrative barriers; 2) lack of effective information and consultation centers; 3) underdevelopment of the system of lending to small businesses. 79. INCOME TAX Profit - income received, reduced by the amount of expenses incurred. The current income tax rate is 24%. Distribution of these percentages: 6,5% - to the federal budget, 17,5% - to the budget of the subject of the Russian Federation. The following are recognized as income: 1) income from the sale of goods (works, services) and property rights (income from sale); 2) non-operating income. When determining the tax base, the following incomes are not taken into account: 1) in the form of property, property rights, works or services received from other persons in the order of advance payment for goods (works, services) by taxpayers who determine income and expenses on an accrual basis; 2) in the form of property, property rights received in the form of a pledge or deposit as security for obligations; 3) in the form of property, property rights or non-property rights having a monetary value, which are received in the form of contributions (contributions) to the authorized (share) capital (fund) of the organization (including income in the form of an excess of the placement price of shares (stakes) over their nominal value (initial size); 4) in the form of property, property rights that are received within the initial contribution by a participant in a business company or partnership (his successor or heir) upon withdrawal (withdrawal) from a business company or partnership or in the distribution of property of a liquidated business company or partnership between its participants; 5) in the form of property, property rights and (or) non-property rights having a monetary value, which are received within the initial contribution by a participant in a simple partnership agreement (agreement on joint activity) or his successor in the event of separation of his share from property in common ownership parties to the contract, or the division of such property; 6) in the form of funds and other property received in the form of gratuitous assistance (assistance) in the manner prescribed by Federal law "On gratuitous assistance (assistance) of the Russian Federation and the introduction of amendments and additions to certain legislative acts of the Russian Federation on taxes and on the establishment of benefits for payments to state non-budgetary funds in connection with the implementation of gratuitous assistance (assistance) of the Russian Federation". expenses reasonable and documented costs, losses incurred (incurred) by the taxpayer are recognized: - justified costs - economically justified costs, the assessment of which is expressed in monetary terms; - documented expenses - expenses confirmed by documents drawn up in accordance with the legislation of the Russian Federation. Expenses are recognized as any costs, provided that they are made for the implementation of activities aimed at generating income. 1. The costs associated with the production and sale include: a) costs associated with the manufacture (production), storage and delivery of goods, performance of work, provision of services, acquisition and (or) sale of goods (works, services, property rights ); b) expenses for the maintenance and operation, repair and maintenance of fixed assets and other property, as well as for maintaining them in good (up-to-date) condition; c) expenses for the development of natural resources; d) expenses for research and development; e) expenses for compulsory and voluntary insurance; f) other costs associated with production and (or) sale. 2. The costs associated with the production and (or) sale are divided into: a) material costs; b) labor costs; c) the amount of accrued depreciation; d) other expenses. 80. OPPORTUNITY COST opportunity cost is the cost of producing one good expressed in terms of the cost of producing another good. Opportunity cost is also called opportunity cost. Opportunity costs and economic efficiency. The concept of opportunity cost is an effective tool in making effective economic decisions. Resource cost estimation is done here on the basis of a comparison with the best of competing, the most efficient method of using rare resources. The centrally controlled system has deprived business entities of independence in making strategic decisions. And that means the possibility of choosing the best alternatives. The central authorities themselves, even with the help of computers, were unable to calculate the optimal structure of production for the country. They could not find answers to the two main questions of the economy "what to produce?" and "how to produce?". Therefore, under these conditions, the result of opportunity costs was often a shortage of goods and low-quality products. For a market economy, choice and alternativeness are integral features. Resources must be used in an optimal way, then they will bring maximum profit. Saturation with the goods and services that consumers need is a persistent outcome of the opportunity cost of the market system. Uncertainty in the opportunity cost. Opportunity costs are sometimes difficult to imagine as a certain amount of rubles or dollars. In a widely and dynamically changing economic environment, it is difficult to choose the best way to use the available resource. In a market economy, this is done by the entrepreneur himself as the organizer of production. Based on his experience and intuition, he determines the effect of a particular direction of resource use. At the same time, income from lost opportunities (and hence the size of opportunity costs) are always hypothetical. For example, assuming that the opportunity cost of producing miniskirts would be 1 million rubles, the company proceeded from the hypothesis that maxiskirts could be sold for this amount. But who can guarantee that fashion would not make long skirts more popular? And that they could not be sold for 2 million rubles? However, one cannot be sure that all alternatives have been considered. Perhaps, by directing these funds to tailoring men's trousers, the company will receive much more profit. Opportunity costs and the time factor. The accounting concept completely ignores the time factor. It estimates the costs based on the results of already completed transactions. And when determining opportunity costs, it is important to understand that the effect of any option for using a resource can manifest itself in different periods. The choice of an alternative is often connected with the answer to the question, what to prefer: quick profit at the cost of future losses or current losses for the sake of profit in the future? On the one hand, this complicates the assessment of costs. On the other hand, the complexity of the analysis turns into a plus for a more detailed consideration of all aspects of the future project. 81. WEAR Export - depreciation of long-term tangible production assets (fixed assets) - buildings, equipment, transport, etc.; periodic distribution of the value of assets over the period of their service life. Physical deterioration - material wear and tear of the means of labor, their gradual loss of their use value and value in the process of use or inactivity, due to the influence of the forces of nature and under emergency circumstances (fires, floods, etc.). RџSЂRё physical wear and tear associated with inaction, the means of labor completely or partially fail and their value is lost irretrievably. The terms of such wear are determined during operation, the wear time is the basis for determining the duration of the depreciation period (wear) and depreciation rates. The enterprises apply a system of scheduled preventive repairs, including technical and preventive inspections, current (small and medium) and major repairs. Of particular importance is the overhaul, as a result of which the worn out parts of the machine and equipment are replaced with new ones, i.e. a partial reproduction of the object in kind is carried out. There are two forms of such a replacement - the replacement of individual elements of the means of labor with new ones that have similar characteristics, which restores the lost consumer properties of the machine; Simultaneously with the replacement, modernization can also take place, involving the improvement of the production and operational properties of machinery and equipment. The value of the decrease in the value of the object as a result of physical wear and tear according to the criterion of technical condition is established on the basis of expert assessments by means of a physical examination of the object. Obsolescence - the process of depreciation of equipment under the influence of technological progress. Equipment can become morally obsolete as a result of: a) cheaper production of machines similar to the existing ones; b) the creation of new, more economical or productive machines. Functional wear due to a change in the range of products, leading to the fact that the existing specialized equipment remains unloaded. renovation - the process of changing the object in accordance with the latest requirements and standards, for example, the modernization of the production process, technical equipment, etc. Modernization of equipment has become a very profitable business in the West. Modernization firms buy obsolete equipment from large companies at bargain prices, such as metalworking machines with little physical wear and tear, but obsolete, equip them with modern numerical control tools and turn them into modern machines. Buyers have the opportunity to get fairly modern equipment with warranty service at prices that are significantly lower than for new equipment. The process of replacing production assets (machines, equipment, industrial buildings and structures) that are retired as a result of physical and obsolescence with more advanced ones is carried out in three ways: 1) by replacing individual means of labor. If a broken element in the machine is replaced by a new one, but the same, a repair is made. If the machine is redesigned so that it has become more productive, modernization has been carried out. If the machine is replaced by a new, more progressive one, a renovation has taken place. Of course, rigid boundaries are rather arbitrary. So, major repairs are often accompanied by modernization. And the modernization of the entire production process can be so significant that it implies renovation; 2) through the reconstruction of enterprises (or their divisions), during which part of the worn-out fixed assets is replaced by more modern ones; 3) By building new enterprises to replace the liquidated old ones. 82. Cushioning Depreciation - this is the transfer of part of the value of fixed capital to a newly created product. The term "depreciation" is used in two senses: both the depreciation itself and the amount of accumulation of funds in the depreciation fund corresponding to the depreciation. Depreciation charges reflect the amount of depreciation of capital resources and serve as a source of reproduction of capital goods. depreciation rate. The formation of an amortization fund and its use are the competence of the enterprises themselves. However, the state regulates this process by legislatively establishing depreciation rates. On the basis of these norms, enterprises determine the amount of depreciation. It is equal to the product of the book value of fixed production assets by the depreciation rate. In many countries, depreciation rates limit the upper limit of depreciation write-offs. The depreciation rate is calculated taking into account the rate of both physical and obsolescence. It shows for what time period the cost of fixed assets should be reimbursed. Understating the rate of depreciation deductions slows down technical progress. Consequently, the outdated production potential does not allow to reduce costs. Higher rates lead to an accelerated change of equipment. How to find the optimal ratio? In advanced economies, governments tend to favor slightly higher rates. This policy is called accelerated depreciation. For example, the cost of a car that can actually serve 5 years is allowed by the state to be written off as expenses for 4 years. The purpose of such a policy is to stimulate investment. Since the funds of the sinking fund are spent on updating equipment, the larger the investment will be, the larger its value. The Russian economy is in dire need of investment, so attempts to carry out accelerated depreciation are also observed in our country. In the mid 1990s. for the development of high-tech sectors of the economy and the introduction of efficient equipment, enterprises were given the right to apply accelerated depreciation. But so far, many enterprises cannot use this right: higher depreciation rates would increase costs. Increased costs would affect prices and (in conditions of impoverishment of the population) would make the product uncompetitive. Accelerated depreciation in 1995 amounted to only 1,4% of all depreciation charges in the country. The problem of renewal of fixed capital in Russia. The problem of renewal of Russian capital is very acute. Old equipment has a high average fixed cost. Imperfect equipment consumes more energy and labor resources. Obsolete production equipment and machines represent high gross costs. Enterprises received the right to independently dispose of the depreciation fund. However, they are working in the difficult conditions of the transformational crisis. During the years of reforms, with the undeveloped market of capital goods and high inflation, there was a large-scale depreciation of the fixed assets of the enterprise. As a result, depreciation charges have also been reduced. At the same time, prices for transport services and energy increased at a faster pace. 83. FINANCIAL MARKET Finance - this is a set of monetary relations, in the course of which the formation and use of national funds of funds for the implementation of economic, social and political tasks is carried out. In the totality of financial relations, there are three large interrelated areas: 1) finances of business entities; 2) insurance entities; 3) state subjects. Financial resources are formed from the following sources: 1) own and equivalent funds (share capital, share contributions, profit from core activities, targeted income); 2) mobilized in the financial market as a result of operations with securities; 3) received in the order of redistribution (budget subsidies, subventions, insurance compensation, etc.). Public finances are a means of redistributing the value of the social product and part of the national wealth. They are based on the system of budgets. Separate of the elements in the system of public finances include non-budgetary funds to finance certain targeted activities (pension, medical fund, employment fund). Finance is one of the most important tools through which the impact on the economy of an economic entity is carried out. The financial mechanism is a system of organization, planning and use of financial resources. The financial market is designed to establish direct contacts between buyers and sellers of financial resources. It is customary to distinguish several main types of the financial market: 1) foreign exchange market; 2) the gold market; 3) capital market. In the foreign exchange market, foreign exchange transactions are made through banks and other financial institutions. In the gold market, cash, wholesale and other transactions with gold are made. In the capital market, long-term capital and debt obligations are accumulated and formed. It is the main type of financial market in a market economy, with the help of which companies seek sources of financing for their activities. The capital market is sometimes subdivided into the securities market and the loan capital market. The securities market is divided into primary and secondary, exchange and over-the-counter. The primary securities market is the issue and initial placement of securities. In this market, companies obtain the necessary financial resources by selling their securities. The secondary market is intended for the circulation of previously issued securities. In the secondary market, companies do not receive financial resources directly, but this market is extremely important because it allows investors, if necessary, to get back the money invested in securities, as well as to receive income from operations with them. The stock market is a securities market carried out by stock exchanges. The procedure for participation in trading for issuers, investors and intermediaries is determined by the exchanges. The over-the-counter market is intended for the circulation of securities that have not been admitted to stock exchanges. 84. TYPES OF WAGES, FORMS OF PAYMENT There are two types of wages: basic и additional. К primary relate: 1) payment accrued to employees for hours worked; 2) the quantity and quality of the work performed; 3) payment at piece rates, tariff rates, salaries, bonuses; 4) surcharges in connection with deviations from normal working conditions, for work at night, for overtime work, payment for downtime through no fault of the workers. К additional wages include: 1) payments for unworked time provided for by labor legislation; 2) payment for regular vacations, breaks at work for nursing mothers; 3) preferential hours for teenagers during the performance of state and public duties; 4) severance pay upon dismissal. Depending on the amount of labor and time, there are two main forms of remuneration: piecework and time. piece system remuneration is used when it is possible to take into account the quantitative indicators of the result of labor and normalize it by establishing production standards and time standards. Under the piecework system, the work of workers is paid at piece rates in accordance with the quantity of products produced (work performed and services rendered). Piece rate - a derived value, which is determined by calculation. To do this, the hourly wage rate for the corresponding category of work performed is divided by the hourly rate of output or multiplied by the established rate of time in hours or days. To determine the final earnings, the piece rate is multiplied by the number of products produced. When determining the piece rate, they proceed from the tariff rates of the work performed, and not from the tariff category assigned to the employee. Depending on the method of calculating earnings for piecework pay, there are several forms of remuneration: 1) direct piecework, when the labor of workers is paid for the number of units of products manufactured by them and work performed on the basis of fixed piece rates; 2) piecework-progressive, in which payment is increased for production in excess of the norm; 3) piece-bonus, when wages include bonuses for overfulfillment of production standards, achievement of certain quality indicators: delivery of work from the first presentation, absence of marriage, complaints, savings in materials. time system wages is reduced to payment of the cost of labor for hours worked and is used when it is impossible to quantify the results of the labor activity of workers, employees and managers. With a time-based wage system, the amount of wages depends on the actual hours worked and the employee's wage rate, and not on the number of work performed. Depending on the unit of accounting for hours worked, the following tariff rates are applied: hourly, daily, monthly. In the time-based system of remuneration, two forms are distinguished: simple time-based and time-bonus. With a simple time wage, the worker's earnings are determined by multiplying the hourly rate of his category by the number of hours worked by him. With time-bonus wages, a bonus is added to the amount of earnings at the tariff, which is set as a percentage of the tariff rate. 85. FUNCTIONS OF THE LAW OF COST The Law of the Market Economy has the following functions. 1. regulatory function. It consists in the fact that the law of value (through prices) regulates the volume of production and sale of individual goods, and at the same time the structure of all social production, the distribution of means of production and labor between industries. This regulation occurs through the deviation of prices from the cost of goods on the market. The equality of supply and demand at a given price level makes it possible to maintain a stable volume of production. If the demand for a product is less than its supply, then the price will be lower than the value. The production of this product will become economically unprofitable. This leads to a reduction in the production of unprofitable goods, to the movement of labor to other industries. When demand exceeds supply, the price of a product will be higher than its value, which contributes to the expansion of production, the influx of capital, means of production and labor into profitable industries. As a result, the structure of social production is brought into line with the structure of social needs, or rather, with the effective demand of the population for goods and services. This ensures the deficit-free economy, prevents a shortage of goods, the depreciation of money, and a decrease in the level of consumption. 2. stimulating function. It consists in its impact on reducing production costs, increasing labor productivity, production efficiency based on the introduction of scientific and technological progress. The price of a commodity fluctuates around the average socially necessary expenditure of labor. This means that the market creates a constant economic incentive for producers, encourages them to reduce the individual costs of producing goods, which provides them with a stable position in the market. But for this, each commodity producer must increase labor productivity, rationally use material and technical resources, improve the quality of goods on the basis of new equipment and production technology. The law of value differentiates commodity producers, implements social stratification under the influence of market competition and deviations of individual costs for the production of goods from the level of socially necessary labor costs. The law of value favors the combination of small, medium and large-scale production, the diversity of forms of management. But in the course of competition, the weak lose their economic independence and become dependent on the larger and stronger ones. Thus, the law of value expresses the ratio of price to the socially necessary labor expended in the production of commodities. The more labor expended on the production of any commodity, the more you have to pay for it. But the process of buying and selling is affected not only by labor intensity, but also by many other factors: 1) product quality; 2) the relationship between supply and demand; 3) the degree of monopoly of sellers and buyers; 4) government price policy, the amount of issued paper money, etc. Therefore, the real price almost always deviates from the value, but the value always remains the average position around which prices fluctuate. 86. RETURNS TO SCALE In the long run, the reserves of any resource can be increased or decreased. "Inert" and "mobile" resources become variable within this period. This means that an enterprise, in order to adapt to market demand, can vary its scale of production, proportionally changing all the resources used. Scale effect - the ratio (coefficient) of changes in the volume of production with a change in the amount of all resources used. Positive economies of scale. Occurs in such an organization of production, when long-term average costs fall as output increases. The main condition for such an organization of production is the specialization of production and management. Moreover, as the size of production grows, the possibilities of using the advantages of specialization in production and management increase. The large scale of production will make better use of the labor of management specialists due to its deeper specialization. Small-scale industries are generally not able to use the labor of a specialist manager for its intended purpose. Another source of economies of scale is the efficient use of equipment. Large equipment is more productive and the cost of using it is 2/3 of the result. Small-scale production is often unable to use the most efficient (from a technological point of view) production equipment. The result of this situation is the loss of technical economy. The economies of scale of production are largely associated with the possibility of developing side industries, manufacturing products based on waste from the main production. Here, too, a large enterprise will have more opportunities than a small one. All major sources of economies of scale are closely related to the scale of production. Increasing the scale of production creates positive economies of scale. However, this is not the only result of the increase in the scale of production. As the scale of production increases, both savings and damages appear. Negative scale effect. Occurs in the organization of production, when long-term average costs increase as the volume of output increases. The main reason for the emergence of a negative effect of scale is associated with a violation of the controllability of very large production. As production grows, it becomes more and more dependent on hierarchical methods of coordinating the activities of its personnel. With the growth of hierarchy, the costs for the transfer and processing of information necessary for decision-making increase. For branched organizational structures, there is a tendency to weaken incentives for the manifestation of personal initiative and the emergence of interests that are different from the interests of production. As a result, high costs are required to maintain the proper level of employee motivation. At large enterprises, the effectiveness of interaction between its individual divisions is reduced, and control over the implementation of decisions made by management becomes more difficult. 87. SIGNIFICANCE AND TYPES OF ACCOUNTING STATEMENTS Drawing up reports is the final step in the accounting process. Accounting reporting is a system of indicators obtained on the basis of accounting data characterizing the property and financial position of the organization (enterprise) and the results of its economic activity for the reporting period. Reporting performs an important functional role in the system of economic information. It integrates information of all types of accounting (accounting, statistical, operational and technical), provides communication and comparison of planned, regulatory and accounting data presented in the form of tables that are convenient for information perception by all users. The financial statements of organizations are classified according to three main features: 1) frequency of compilation; 2) the volume of information contained in the reporting; 3) the degree of generalization of reporting data. Depending on the covered period of activity of the organization, there are intermediate и annual reporting. Interim reporting is considered to be prepared on an intra-annual date (monthly, quarterly). Monthly and quarterly reports are compiled on an accrual basis from the beginning of the reporting year. The annual report is an annual report. According to the volume of information contained in the reporting, they distinguish the inner и external reporting. At the same time, internal reporting includes information about the work of any division of the organization. Compilation of internal reporting is caused by the need to monitor the work of its structural divisions. External reporting characterizes the activities of the organization as a whole and is a source of information for external users. By the degree of generalization of reporting data distinguish between: primary reports compiled directly by organizations, and summary reports compiled by higher, or parent, organizations (companies, firms) based on primary reports. Accounting reporting as a source of information about the activities of the organization is used to manage its economy and take the necessary measures for its development. A thorough study and analysis of reporting indicators make it possible to identify shortcomings in the work and determine ways to eliminate them. Summarized information about the activities of the organization is used by various interested users to make certain business decisions. Based on the interests of the information needs of users of financial statements, they can be divided into: 1) internal users of statements. The internal users of financial statements include the heads of the organization and structural divisions of all levels, who, according to the reporting data, identify the need for financial resources, evaluate the correctness and effectiveness of the decisions made, etc.; 2) external reporting users. External users of accounting information about the activities of the organization include those who are outside the organization, but have or would like to have a financial interest in it. Among them are shareholders and potential investors, creditors, suppliers and buyers, government agencies, etc. 88. TAXES The state needs funds to carry out its functions. The source of these financial resources are the funds that the government collects from individuals and legal entities. These compulsory levies by the government are called taxes. Taxes express the obligation of all legal entities and individuals receiving income to participate in the formation of public financial resources. The collection of taxes is carried out with the help of the tax service. Taxes are the most important link in the financial policy of the state in modern conditions. In addition, being a factor in the redistribution of national income, taxes are designed to: 1) extinguish emerging "failures" in the distribution system; 2) to interest (or not to interest) people in the development of a particular form of activity; 3) be an integral part of the state budget of the country. There are two principles of taxation. The first principle. Individuals and legal entities must pay taxes in proportion to the benefits they received from the state. Those who have benefited greatly from the goods and services offered by the government must pay the taxes necessary to finance the production of those goods and services. Some part of the public goods is financed mainly on the basis of this principle. For example, taxes on gasoline are usually intended to finance both the construction and repair of highways. Thus, whoever uses good roads pays the cost of maintaining and repairing these roads. But the universal application of this principle is associated with certain difficulties. For example, in this case it is impossible to determine what personal benefit, in what amount, each taxpayer receives from state spending on national defense, health care, and education. Even in the seemingly measurable case of road financing, these benefits are found to be very difficult to assess. Individual car owners do not benefit equally from good quality roads. And those who don't have a car also benefit. Entrepreneurs certainly benefit greatly from the expansion of the market due to the appearance of good roads. In addition, following this principle, it would be necessary to tax, for example, only the poor, the unemployed, to finance the benefits they receive. Second principle assumes the dependence of the tax on the amount of income received. Individuals and legal entities with higher incomes pay higher taxes, and vice versa. The rationality of this principle lies in the fact that there is naturally a difference between a tax that is levied on the consumption of luxury goods, and a tax that is withheld, even to a small extent, from the expenditure on basic necessities. This principle seems fair and rational. However, the problem is that there is not yet a rigorous scientific approach to measuring someone's ability to pay taxes. Modern tax systems use both principles of taxation depending on economic and social expediency. 89. INVESTMENT IN THE ECONOMY Investment - this is an investment in capital, both monetary and real. They are carried out in the form of cash, bank deposits, shares, shares and other securities, investments in movable and immovable property, intellectual property, property rights and other values. Investments in reproduction are called capital investments. Capital investments as part of investments can be called investments in the economic sense, since they are associated with the reproduction of real capital, i.e. capital by economic definition. Capital investments include the cost of construction work of all kinds; 1) equipment installation costs; 2) for the purchase of equipment that requires and does not require installation, provided for in construction estimates; 3) for the purchase of production tools and household equipment included in construction estimates; 4) for the purchase of machinery and equipment not included in construction estimates; 5) for other capital works and expenses. Capital repairs are not included in capital investments. Foreign investment in the Russian economy. Due to the instability of the economic situation in Russia, many economists associate the future of our country with attracting foreign investment to the Russian economy. Foreign investment can serve as a catalyst for the development and growth of domestic investment. The influx of foreign investment is important for achieving such goals as getting out of the current crisis state, the initial recovery of the economy. At the same time, Russian public interests do not coincide with the interests of foreign investors. Therefore, it is important to attract capitals in such a way as not to deprive their owners of their own motivations, while at the same time directing the actions of the latter to the benefit of social goals. This task can be solved, but for this, first of all, it is necessary to study the specific state in the field of attracting foreign investment in Russian conditions. It is necessary to consider the economic and legislative bases that ensure the investment climate in the country. Given the serious technological backwardness of the Russian economy in most areas, Russia needs foreign capital. It could bring new (for Russia) technologies and modern management methods. Foreign capital can contribute to the development of domestic investment. The experience of many developing countries shows that the investment boom in the economy begins with the arrival of foreign capital. The creation of their own advanced technologies in a number of countries began with the development of technologies brought by foreign capital. General issues of innovation policy are reflected in the decrees of the President of the Russian Federation, in the preparation of which departments of the Presidential Administration, as well as the Council for Science and Technology Policy under the President of the Russian Federation, participate. Compared to other regions of Russia, 66% of all foreign capital was invested in the Moscow economy. The share of developed countries accounts for more than four-fifths of all investments in Russia, and in 1996, the United States received $1 billion 695 million (26,1%), from Switzerland - $1 billion 323 million (20,3%), from the Netherlands - $980 million (15,1%), from the UK - $486 million (7,5%). 90. FINANCIAL RISK ASSESSMENT The financial stability of an enterprise is the main component of its overall sustainability. The problem of risk is closely related to the financial stability of the enterprise, which allows it to freely maneuver cash to ensure all payments and expand production. At the same time, financial stability should be optimal, since excess deadens funds and hinders development. Financial stability can be internal and external. Internal due to such a state and dynamics of tangible and value assets that reliably provide a high result of work. Outside sustainability is determined by the stability of the economic environment. In the financial aspect, overall stability is guaranteed by the high profitability of the enterprise, which gives it the necessary margin of safety. It is impossible to assess the overall financial position of the enterprise with any one indicator. This can be done using several groups of indicators. They are based on accounting data (balance sheet). First, you can determine the general direction of balance changes over the past period. Its increase is generally considered positive, and its decrease is considered a negative sign. It is advisable to compare the dynamics of the balance sheet with changes in production, sales, and profits. Their growth at a higher rate indicates an improvement in the financial position of the company, and vice versa. An important characteristic of the position of the enterprise is its financial liquidity. Liquidity is the ability to cover liabilities with existing assets. Most liquid assets - this is cash and investments in short-term securities. They should exceed in their value the most urgent liabilities represented by accounts payable. Marketable assets should be greater than short-term loans. For example, accounts receivable. Slowly realizable assets should be larger than long-term and medium-term ones. Hard-to-sell assets are greater than permanent liabilities. The most general indicator of the financial stability of the organization is considered to be the surplus of sources of funds for the formation of reserves for individual elements of the balance sheet. An external manifestation of the financial stability of the enterprise is its solvency. Solvency is determined using: 1) absolute liquidity ratio, which is the ratio of the amount of cash and short-term financial investments to the amount of short-term liabilities; 2) intermediate coverage ratio - obtained by dividing the total amount of cash, short-term financial investments and receivables by the same amount of short-term liabilities; 3) total coverage ratio - this is the ratio to the amount of short-term liabilities of the total amount of reserves and costs (without prepaid expenses) and cash, short-term financial investments, as well as receivables. For all these coefficients, there are limiting values, the excess of which indicates the unfavorable financial situation of the company and the risk of bankruptcy. Author: Levkina E.V.
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