CH3 - Economics & Business

Question 1

What is economics?

Answer 1

It is the study of how individuals, companies, governments and nations allocate their limited resources to satisfy their unlimited wants and needs.

Question 2

What are resources?

Answer 2

Resources the inputs used to produce outputs.

Question 3

What does factors of production mean?

Answer 3

Factors of production are the basic resources that a country’s businesses use to produce goods and services.

Question 4

What factors of production incudes?

Answer 4

1. Land
2. Labour
3. Capital
4. Natural resources
5. Entrepreneurs
6. Knowledge

Question 5

What is an Input Market?

Answer 5

Companies buy inputs or resource from households for production. It could be land, labour, capital, entrepreneurship.

Question 6

What is an output market?

Answer 6

Households buy goods and services from companies.

Question 7

What does economy system means in the context of a country?

Answer 7

A country’s economic system is the way in which a country seeks to allocate its resources.

Question 8

What are the 3 fundamental questions that an economic systems seek to answer.

Answer 8

1. What
   What goods and services should be produced to meet consumer.
2. How
   How should these goods and services be produced.
3. Who
   Who should receive the goods and services.

Question 9

Identify the 2 possible extremes of economic system

Answer 9

1. Planned Systems
2. Free market system

Question 10

What is a planned system?

Answer 10

Where government exerts control over the allocation or distribution of all goods and services.

Question 11

What is the Free-market system?

Answer 11

Where businesses are owned and operated by individuals free to respond to consumer demand.

Question 12

What is GDP?

Answer 12

Gross Domestic Product.
GDP is the value of all finished goods and services produced IN a country within a certain period of time.

Question 13

What is one of the methods of calculating GDP?

Answer 13

GDP= C + G + I + NX
C = Consumption
G = Government Spending
I = Investment
NX = Net exports

Question 14

What are the elements that GDP cannot gauge?

Answer 14

The health, wellbeing and happiness of a population.

Question 15

What are some other examples of statistics that governments look at to determine a country is being run effectively?

Answer 15

1. UN’s Human Development Index.
2. GINI coefficient.

Question 16

What does UN’s Human Development Index measures?

Answer 16

Human longevity and well being.

Question 17

What does he GINI Coefficient measures?

Answer 17

Wealth inequality.

Question 18

What are the 3 economic goals?

Answer 18

1. Economic Growth
2. High employment
3. Price stability

Question 19

What is an inflation?

Answer 19

When the economy overheats it leads to the increase in prices of goods and services which is called inflation.

Question 20

What is a deflation?

Answer 20

When the GDP goes down and customers buy less gods and services it results in less goods and services being produces which leads to a decrease in prices which is called deflation.

Question 21

What is monetary Policy?

Answer 21

The BoC controls the monetary police by controlling the flow/supply of money and the interest rates by which it lends money to other banks.

Question 22

What is Fiscal policy?

Answer 22

The Federal and Provincial Governments together control fiscal policy which relates to taxation levels and the level of government spending. If the Government increases and/or reduces taxation this will put more money in the pockets of the businesses and individuals and stimulate the economy.

Question 23

What is a Market?

Answer 23

It is an exchange process between buyers and sellers.

Question 24

What is a market economy?

Answer 24

It is the result of millions of exchanges each day.

Question 25

What is a competition?

Answer 25

Competition occurs when businesses vie for the same resources or customers in a particular market or industry.

Question 26

What are the 4 different market competition?

Answer 26

1. Monopoly
2. Oligopoly
3. Monopolistic Competition
4. Perfect Competition

Question 27

What is a perfect competition?

Answer 27

1. There are many sellers.
2. The product is identical.
3. There are no barrier of entry
4. Market dictates the price so the pricing is balanced and transparent.

Question 28

What is a monopolistic competition?

Answer 28

1. There are less sellers than are in the perfect competition.
2. Very few and limited barrier of entry.
3. Different companies control the prices.

Question 29

What is an Oligopoly?

Answer 29

A small number of large companies with a few influencing the other to gravitate to a market price.

Question 30

What is Monopoly?

Answer 30

Only one company controls the industry and can determine the market price.

Question 31

What does supply mean?

Answer 31

Supply is the amount of goods that suppliers will produce at a certain price.

Question 32

What does Demand mean?

Answer 32

Demand is the amount of goods that a buyer will buy at certain price.

Question 33

What is the Equilibrium Price?

Answer 33

The equilibrium price is where supply and demand meet.