Module 7

• The bank is a financial institution that lends money to both public as well as private organizations. They are institutions that conduct business purely on profit motive.
• Corporation refers to the aboard category of non-state organizations representing a company or group of people that engage in a lawful activity about a public function.
• Types of Corporation

  • A stock corporation is where ownership is through stockholders who own particular
  • A Nonstock corporation is owned by members that join the organization.
• Cooperative or coop refers to an autonomous association whose membership is voluntary towards the attainment of common economic, social, and cultural needs or aspirations.
• A Trade or Labor Union refers to an organization of workers whose main objective is to protect the welfare of its members.
• An international organization is an organization established by a treaty or other instrument governed by international law and possessing its own international legal by personality.
• Transnational advocacy groups are defined as “self-organized advocacy groups undertaking voluntary actions across state borders in pursuit of what they deem the wider public interest.”
• Development agencies were formed as a response to crises like war damage and industrial decline
• (3) Types of Nonmarket Transactions

  • Reciprocity
  • Transfer
  • Redistribution
• (Type of Nonmarket Transaction)

  Reciprocity exists when there is an exchange of goods or labor between individuals in a community (equal)
• (Type of Nonmarket Transaction)

  Transfer entails a redistribution of income that is not matched by the actual exchange of goods and services (unequal)
• (Type of Nonmarket Transaction)

  Redistribution can be considered as a combination of the features of transfer and reciprocity, where the economic exchange involves the collection of goods from members, the pooling of these goods, and then the redistribution of these goods among the same members.
• A market system is a type of economic system that allows the free flow of goods between and among private individuals and firms with very limited participation from the government
• The invisible hand integrates both the idea of self-interest and competition in the market place, which brings about a socially optimum result even in the absence of government intervention.
• A market is a mechanism and not necessarily a place that brings buyers and sellers together for the desired transaction.
• Prices serve as a signaling device to indicate the value of a good or service to both the buyers and the sellers
• Specialization is the ability to produce goods and services efficiently.
• Human specialization is called the division of labor. Specialization contributes to efficiency by taking advantage of the differences in every person’s abilities
• Barter or the swapping of goods for goods is the traditional means of exchange
• The market transaction involves parties who sell their goods and services in exchange for cash from consumers.
• A market economy is one where the production, distribution, and consumption of goods and services operate through these forms of exchange.
• A free-market economy is one where the price of a good or service is determined by the forces of supply (the available level of products or services provided by producers or sellers) and demand (the level of willingness of consumers to purchase)