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Business, Economics, MBA

Risks and Uncertainty, & Externalities

As my exam gets closer on the fundamental basics of Business Economics, i am going to get some little notes and blogs ups. They are nothing more than my notes… made easier to read.

‘Risk’ will occur where there is an element of chance of injury or loss, such as with a fire. These risks can be quantified, and insured against. However, ‘Uncertainty’ are those outcomes that cannot be insured against nor quantified. These will include political unrest and changes, wars, natural disasters (although there could be a lot of discussion over this fact due to recent events and large insurance claims being made for damages), or simply whether an idea will work or not.

When economists look at the world around them, they always assume perfect information. This is concerned with business managers having all the relavant information and knowledge available to them, so that a 100% educated decision is made. Although, it is understood that in realty this may not be the case. We shall assume perfect information whilst taking about economics.

As a firm goes about its business there are factors that it influences outside of the company. These are called externalities. These may include social costs and benefits.

Social costs can be described as negative influences the company has on the surrounding community and environment. eg As a company increases its production quantity, it may increase its level of environmental pollution.

Social benefits may be seen as positive changes seen in the surrounding community and environment due to the actions of a firm. eg If a water company was to dam a river, it may create a beautiful lake for the local community and other businesses may well start Sailing Clubs.

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About loganjehall

I focus on building an internal culture focussed on listening to and working alongside customers to build value for all stakeholders. Real lasting change that understands the real needs of the customer is the only way to ensure a dynamic constant state of learning and innovation. I am a highly experienced sales, marketing and business professional with wide ranging experience in varied industries. Having worked in both B2B and B2C I understand sales and business is really about P2P (people to people) and therefore always focus on relationships and engagement. "Business is socialising with a purpose" (Gaping Void) Passion, people, vision, strategy, customers, advocates, believers, innovation, customer engagement, social, knowledge management and appropriate use of technology are vital in the attainment of business goals. I am a co-founder of Movebubble, a new technology startup in #Proptech. This blog is really here to allow me to develop my voice and ideas, and gain feedback from a wider audience than just the lecture or breakout room. Hopefully i can introduce some interesting points, and experiment with digital, marketing, engagement, social media and SEO techniques and tips i am learning on the way. I hope you enjoy my posts, please let me know what you think with some feedback.

Discussion

One thought on “Risks and Uncertainty, & Externalities

  1. Fear of danger is ten thousand times more terrifying than danger itself. ~Daniel Defoe obtained from Danger quotes

    Posted by Lyka Ricks | December 31, 2011, 4:26 am

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