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Business - 2023 > Basic Economic Concepts > Flashcards

Basic Economic Concepts Flashcards

1
Q

Describe the ‘Merry go Round’ of economic activity

A

-> the business produces goods and services -> SPENDING (EXPENDITURE) ON GOODS & SERVICES​ -> PEOPLE RECEIVE INCOME FOR PHYSICAL AND MENTAL EFFORT WORKING FOR A BUSINESS​ ->

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2
Q

An economy or economic activity involves..
Provide examples

A

Production of physical goods and non-physical services​
eg Cars Education​
Clothes Haircut​
Mobile phones Mobile plans

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3
Q

What are resources

A

Resources are the inputs used in the production of goods and services​

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4
Q

What are the three types of resources

A

Natural, capital, Labour

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5
Q

What is a natural resource

A

Natural resources can be found within the environment (inland water, ocean, forests, minerals underground, arable land, climate)​

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6
Q

What is a capitol resource

A

Building, machinery, equipment, vehicles & technology items used in the production of final goods and services for consumers)​

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7
Q

What is a labour resource

A

The mental and physical efforts of people in the production process​

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8
Q

Why do we have to make choices?

A

Due to the problem of scarcity, choices need to be made about what goods and services will be produced for our society from the limited resources available​

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9
Q

Who do these choices need to be made by?

A

governments, businesses, consumers

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10
Q

Give an example of a government choice

A

do we produce submarines or build better water pipelines for Australia ?

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11
Q

Give an example of a business choice

A

do we make dolls or toy guns ?

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12
Q

Give an example of a consumer choice

A

do I spend money on a textbook or go to the movies and have lunch with friends ?

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13
Q

what is scarcity and what does this mean?

A

“SCARCITY” – unlimited needs & wants but limited resources​… meaning YOU CAN’T ALWAYS GET WHAT YOU WANT!!!​

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14
Q

What are the 10 different types of markets?

A

Commodity, Education, Livestock, Currency, Stock, labour, Bond, Property, Black, Financial

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15
Q

Where unprocessed /primary products are sold, such as wheat, wool, minerals​

A

commodity market

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16
Q

Joan gets a job at a supermarket while completing Year 10​

A

labour market

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17
Q

Ingrid purchases some US dollars for a planned trip to the USA​

A

money market

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18
Q

Aisha invests $20,000 in Flight Centre shares, therefore becoming a part owner in the company.​

A

stock market

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19
Q

Where companies & governments borrow money from investors or lenders​

A

bond market

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20
Q

Jenny receives a loan or credit card from a bank​

A

financial market

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21
Q

Justine sells a stolen bike to Eloise​

A

black market

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22
Q

Lisa’s parents decide to send her to SHGC for her secondary schooling​

A

education market

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23
Q

Simone purchases a house in Clayton​

A

property market

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24
Q

Bea and John are farmers and sell cattle and sheep to the abattoirs​

A

lifestock

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25
Q

What does supply and demand do

A

In most markets the forces of demand and supply generally determine prices and what G & S get produced

26
Q

why do Rising prices generally encourage producers to produce more and falling prices discourage producers

A

because they will gain more profit off of the same product they would usually sell for cheaper

27
Q

what affects does the market structure have

A

the structure of a market may affect the prices and the behaviours of buyers and sellers.​

28
Q

what are the 4 main types of market structures

A

Perfect competition​
Monopolistic competition​
Oligopoly​
Monopoly

29
Q

List the main characteristics that help to determine the type of market structure.​

A

The number of buyers and sellers in a market ​
Differentiation of product​
The freedom with which businesses can enter a market​
The freedom with which businesses can leave a market​
The degree to which buyers and sellers possess information about the products for sale.

30
Q

What is market power

A

Is related to market structure and refers to the ability of a business(or group of businesses) to control or manipulate prices or quantities in the market.​

31
Q

if market structures move from perfect competition to monopoly what does this mean

A

the market is said to become more concentrated. This means that monopolies have a lot of market power and business in a perfectly or purely competitive market have low levels of market power.

32
Q

Can you suggest examples for each type of market structure?​

A

Perfect competition​:
farming
supermarkets
foreign exchange

Monopolistic competition​:
fast food
hotels
hairdressers

Oligopoly​:
cosmetic industry
insurance industry

Monopoly:
Standard oil
Australia post

33
Q

Is it better to operate in a more or less concentrated market?

A

less concentrated as there is less competition so you are able to adjust prices and produce to your needs

34
Q

what are the features of the perfect market?

A

Lots & Lots of buyers and sellers​
Homogenous products (what does this mean?)​
Low barriers to entry into market​
Few barriers preventing businesses from leaving the market ​
Buyers and sellers have perfect information (what does this mean?)

35
Q

Homogenous products (what does this mean?)​

A

the products are similar or the same

36
Q

Buyers and sellers have perfect information (what does this mean?)

A

both buyers and sellers have equal info on the product

37
Q

A perfect market structure has many benefits but also some serious flaws such as?

A

Some socially undesirable G&S will be over produced for example…​
Some socially desirable G & S will be underproduced or not produced for example…​
Some people will miss out altogether! Explain​

Australia has a contemporary market economy.​

The market is very important in allocating resources, but Gov’ts (3 levels) also play a major role! ​

38
Q

Governments in Australia ​
Overarching objective: ​

A

To improve the Living standards or overall wellbeing of the nation​

39
Q

The Government has 3 main roles:​

A
  1. Reallocate resources FOR INSTANCE ALLOCATING RESOURCES TO HEALTH CARE AND CANCER RESEARCH. CANCER RESEARCH MIGHT NOT BE PROFITABLE SO WOULD NOT BE DONE. TAXING CIGARETTES WILL MAKE LESS DEMAND AND THEREFORE CUT THE SUPPLY. ​
  2. Stabilise the economy E.G IF INFLATION MIGHT INCREASE INTEREST RATES TO REDUCE SPENDING. ​
  3. Redistribute incomes: TAX THE RICH TO GIVE AS WELFARE TO THE POOR.​

​

40
Q

The standard of living has 2 main components list them

A

Material standard of living- relates to access to Goods and services and depends greatly on our income & level of GDP .​

Non-material standard of living- intangible aspect of our lives and includes elements such as stress levels, crime rates, congestion, safety, optimism, pollution levels, job satisfaction, environmental health, happiness, hours of work & leisure and more.​

The two elements of wellbeing also affect each other in ways that are compatible and conflicting ways ie they sometimes enhance each other and sometimes they don’t!

41
Q

what is a market

A

A place where buyers interact with sellers and an exchange of goods takes place at an agreed price​

42
Q

What is the black market

A

The selling and purchasing of illegal products.​

43
Q

Why does the Government not like the ‘black markets’ ??​

A

it becomes immensely difficult for the government to plan and implement policies for the country’s economic development.

44
Q

Define the following:
Supply in the market
Demand in the market
The forces of supply and demand determine what?

A

the amount of the product produced​
the amount of the product consumers want
The forces of supply and demand determine prices in a market!!​

45
Q

Why do prices rise in a market?

A

Demand from consumers increases but supply (production) does not increase​
Supply (production) decreases but demand is still the same

46
Q

Why do prices decrease in a market?

A

Supply (amount produced) stays the same but demand from consumers decreases​
Supply (amount produced) increases but the demand does not change

47
Q

define Commodity market

A

a marketplace for buying, selling, and trading raw materials

48
Q

define Education market

A

Public or private institutions providing education to students in kindergarten through twelfth grade, and non-college adult education.

49
Q

define Livestock

A

public market place consisting of pens or other enclosures where all classes of livestock or poultry are received on consignment and kept for subsequent sale, either through public auction or private sale.

50
Q

define Currency market

A

worldwide market in which currencies are traded

51
Q

define Stock market

A

a marketplace where buyers and sellers meet to trade i.e. buy and sell shares of publicly listed companies.

52
Q

define labour market

A

The labor market refers to the supply of and demand for labor, in which employees provide the supply and employers provide the demand

53
Q

define Bond market

A

a financial market where debt securities are issued and traded

54
Q

define Property market

A

business or trade in land and houses

55
Q

define Black market

A

an illegal traffic or trade in officially controlled or scarce commodities

56
Q

define Financial market

A

any marketplace where the trading of securities occurs, including the stock market, bond market, forex market, and derivatives market

57
Q

characteristics of perfect competition

A

price taker
many buyers and sellers
homogenous products
no barriers to entry

58
Q

characteristics of oligopoly

A

few sellers and many buyers
differentiated products
barrier to entry
a market dominated by a few

59
Q

characteristics of monopolistic competition

A

many buyers and sellers
differentiated products
charge slightly different prices

60
Q

characteristics of monopoly

A

1 seller many buyers
high barrier to entry
price maker

61
Q

rivalrous

A

depletes more if it is used eg fishing

Business - 2023 (3 decks)

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