chapter 1 pt 2

Question 1

what are the future implications of current choices made by consumers

Answer 1

choices faced in the present by consumers are the opportunity cost of buying essential goods and services (such as food and water) and forgoing luxuries such as holidays and new cars for the future

Question 2

what are the future implications of current choices made by businesses

Answer 2

firms face the opp cost of rpoducing some goods and services and not others. Due to the business’s limited amount of resources, they will have to choose which products will maximise profit in the medium to long term.
eg if an business decides to produce books, the opp cost would be the magazines or newsletters that could have been produced with the same resources

Question 3

what are future implications of current choices made by governments

Answer 3

In the short term, governments may want to spend on immediate wants such as healthcare and social welfare. However, in the long term, the economy may suffer from a lower skill-based labour force and weaker infrastructure (eg transport). Politically, its more popular to satisfy immediate wants than plan for the future

Question 4

how would a gov budget to influence future implications of current choices

Answer 4

If a gov budget for a deficit (spending higher than revenue), gov may face higher debt levels and lower spending

If a gov budgets for as surplus (spending lower than revenue), gov may be able to pay current debts and spend more on infrastructure

Question 5

economic factors underlying decision making - consumers (use ur noggin)

Answer 5

economic factors considered are:
age
income
expectations
occupation/education
voting (political involvement)
personality factors
future plans and family circumstances

Question 6

economic factors underlying decision making - business (PRIP)

Answer 6

aim: to generate the most profit using the least resources, thus need to consider:
Pricing - lowering prices to generate more sales
Resource use - consider the ethical issues (is it worth it/will brand image be better)
Industrial relations - unions and wage negotiations (higher labour productivity?)
Production - cheapest available resource

Question 7

economic factors underlying decision-making - governments

Answer 7

(TIRS)
the factors that gov considered that influence the decisions of individuals and firms are:
Tax - if income is less when you have considered tax compared to before, when you were unemployed and had social welfare, the tax may be unmotivating and ppl give up
Reducing interest rates - encourage higher consumer spending and business investment
Incentives and disincentives - encourage/discourage certain activities (tax on cigs)
Subsidise - payments, tax breaks or support to increase workforce