1.1 Scarcity, Choice And Potential Conflicts

Question 1

Scarcity

Answer 1

Describes the way people’s wants and needs always exceed the resources available to satisfy them

Question 2

Market Forces

Answer 2

The forces of Demand and supply as they operate freely and interact to determine the allocation of resources

Question 3

Free Market Economy

Answer 3

An economy with no interference from outside agencies, such as the government

Question 4

Allocation of Resources

Answer 4

The way resources are used and shared out (distributed) within the economy

Question 5

Opportunity Cost

Answer 5

The cost of the next best alternative

Question 6

Trade-off

Answer 6

A situation where having more of one thing leads to having less of another

Question 7

Profit maximisation

Answer 7

A business objective which involves making as much profit as possible

Question 8

Sales maximisation

Answer 8

A business objective which involves increasing sales by as much as possible

Question 9

Satisficing

Answer 9

Occurs when a firm does not seek maximum profit or sales but achieves a ‘good enough’ level of profit but ensure survival without undue stress and worry

Question 10

Survival

Answer 10

A long-term goal; covering cost matters most when a firm is facing adverse or hostile conditions such as recession or intense competition

Question 11

Market share (Objective)

Answer 11

Expanding or gaining a certain share of the market in order to increase market power, or to maintain market share in face of competition

Question 12

Cost efficiency

Answer 12

Cutting and reducing costs as much as possible or successfully managing low increases In cost growth

Question 13

Return on investment

Answer 13

How well the business can use its assets to generate profit and show visible growth for investors

Question 14

Employee welfare

Answer 14

Making sure the pay is adequate and working conditions are good. some businesses target this objective for ethical reasons while others might find receipt increases productivity and staff retention

Question 15

Social objectives

Answer 15

When a business aims to create benefits for society by pursuing social environmental or ethical goals

Question 16

Stakeholders

Answer 16

Individuals or groups with an interest in the actions of a business

Question 17

Economic agents

Answer 17

Include all those who take decisions to buy, spend, produce, sell or in any way affect how resources are used

Question 18

Dividend

Answer 18

A share of the profit for each year paid to investors and shareholders as a reward and incentive for investing

Question 19

Corporate culture

Answer 19

A set of important assumptions that are shared by people working in a particular business and influence of ways in which decisions are taken there

Question 20

Corporate social responsibility

Answer 20

Taking decisions in a way that takes into account all stakeholders interests. Treating employees, customers and suppliers fairly, avoiding polluting activities and contributing positively to lives in the local community are all part of this