Economic Naturalist

always associate the month of December with flood season especially in Kelantan
& Terengganu. December also normally become a vacation period for most of

Malaysians as this time of the year coincide with school holiday and people are
finishing off their annual leaves to be with their family. You might be
wondering what December has to do with the economy? How about calendar? People
are normally looking for calendar for incoming year in December. Many companies
in Malaysia are producing calendars to be given out to their customers, official
contacts and suppliers. We can find so many types of calendars form small and
simple to big and colorful and quite expensive too. Why companies are producing
calendars? Why they have to incur an additional unnecessary expenses? Is it part
of the advertising expenses? What are the expected benefits? They do not sell
the calendars!! Of course, they are not going to get some income out of this
activity. These are some of the issues that we are trying to explore and answer.

We will relate the issues into some of the economic theories. There must be some
economic reasons for companies to give out complementary calendars every end of
the year. Theory of the Firm A firm is an organization that combines resources
for the purposes of producing goods and/or services for sale. Firms exist
because it would be very inefficient and costly for entrepreneurs to enter into
and enforce contracts with workers and owners of capital, land, and other
resources for each separate step of the production and process. Calendars play
some roles in any firm. Generally, firms produce calendars as part of their
promotion for its products and the company itself. Normally, the calendars are
printed with company\'s particulars such as company\'s logo, name, address, and
contact numbers. It also has the information and pictures of products the
company produce. The pictures are normally in full color and very attractive.

These elements are very important in projection the good image and can be one of
the marketing strategies for the company. The calendars will play a role as part
of the company\'s advertising effort in promoting its products and services.

Normally, calendars are given out as a complimentary to company\'s customer,
suppliers, business contacts and government authorities. Sometime, people need
to buy something from the store in order to get a calendar. Believe it or not
that there are people who buy goods and products just to get the calendar. These
consumers are influenced by the year end discounts and the just for the sake of
calendar that the company offers. But as far as the company is concerned, the
above will increase public awareness of its company and products which will
later have a positive effect on its sale and profit. Of course, the company will
incur some additional expenses in producing calendars in short term but they
will gain in long term. As such, companies are willing to sacrifice short-term
profits for the sake of increasing future or long-term profits. The same goes to
other expenditures such as research & development, and new capital
equipment. These require a very high initial investment and the return may be
realized in five or ten years. Originally, the theory of the firm was based on
the assumption that the goal or objective of the firm was to maximize current or
short-term profits but, the theory of the firm now postulates that the primary
goal or objective of the firm is to maximize the wealth or value of the firm.

This is given by the present value of all expected future profits of the firm.

Future profits must be discounted to the present because a ringgit of profit in
the future is worth less than a ringgit of profit today. As such, companies are
willing to invest in producing calendars as they know that they will gain profit
in long-term. Talking about, there are two types of profit which are business
profit and economic profit. Business profit refers to the revenue of the firm
minus the explicit cost or accounting cost of the firm. The explicits cost are
the actual out-of-pocket expenditures of the firm to purchase or hire the inputs
it requires in production. While the economic profit equals the revenue of the
firm minus its explicit costs and implicit costs. Implicit cost refers to the
value of the inputs owned and used by the firm in its own production processes.

Law of Demand As mentioned earlier, calendars act as a part of advertising
channel for a company. With the right combination of