Chapter 7: To Market To market

Question 0

What are the three Economic questions?

Answer 0

What to produce?
How to produce?
For whom to produce?

Question 1

What is opportunity cost?

Answer 1

.Is a decision faced by an individual or group of people, where they are torn between different options and can only pick one. When a choice is made it takes out any other options including it’s benefits

Question 2

Describe the economic question “What to produce?”

Answer 2

As the consumer demands to buy a product, the entrepreneur coordinates the land. labour and capital resources in the production process and makes the goods, moving away from producing goods and services the consumer does not want.

Question 3

Describe the economic question “How to produce?”

Answer 3

In the market of the economy it is the producer, as owner of the business enterprise, who devised show to produce the commodities the consumers want. the producer could of course take into account the views of consumers. In deciding how to produce, the entrepreneur will always seek to maximise profit by minimising costs as far as possible

Question 4

Describe the economic question “For whom to produce?”

Answer 4

in setting up and running a business you have to take into consideration and determine how much to pay the workers and how this profit will be split up with business partners (if any). “For whom to produce?” refers to how the economic benefits from production will be distributed when the business is set up.

Question 5

What are economic resources?

Answer 5

they are the inputs required by the producer to complete the production process.

Question 6

What are the different types of resources?

Answer 6

.Land
.Labour
.Capital
.Enterprise

Question 7

Describe land resources.

Answer 7

land resources refers to the natural resources this includes:
.fertile pastures (for crops and farm animals)
.mineral reserves (used in constriction of buildings, bridges and motor vehicles etc.)
.Forests ( which provide timber for building, specimens for medical research etc.)
.Oceans (provide fish to eat, pearls to wear etc.)

Question 8

Describe labour resources.

Answer 8

is the person power available to work in the production process. the plumbing and electrical trades are examples of skill shortage in Australia.

Question 9

Describe capital resources.

Answer 9

Is the machinery (equipment), plant no buildings made by people to assist in the manufacture of commodities and provision of services this includes computers, ladders, trucks, cranes, tractors, ships etc.

Question 10

Describe enterprise resources.

Answer 10

This involves the qualities some individuals possess to accurately perceive market opportunities and effectively coordinate the production process. An example would be an entrepreneur because this is the name given to an individual who possess’ the quality of enterprise.

Question 11

What is the difference between needs and wants?

Answer 11

To need and object it means that object is a necessity for you to survive eg. basic food such as bread and milk. Whilst if you want something it means there is a desire for you to posses that certain item but you do not need it to live or survive eg. jewellery

Question 12

What is the concept of scarcity?

Answer 12

That we have limited resources but unlimited need and wants

Question 13

What are complementary products?

Answer 13

complementary products are products which are designed as the name states to complement or correspond to another product and example would be iPads because their complementary product is iPad cases.

Question 14

What are substitute goods?

Answer 14

An alternative good or service that can be used for the same purpose

Question 15

what is the production process?

Answer 15

for producers to supply the goods and services wanted by consumers, they must set about the process of production. The production process involves the actual making of goods or provision of services. To complete this task the producer will require various economic resources, Economic resources are the inputs required by the products to complete the production process.

Question 16

What is a cost benefit analysis?

Answer 16

It is where you evaluate options before making a decision. This analysis involves comparing the pros and cons of each options, so the best decision can be determined and chosen.

Question 17

What is the law of demand?

Answer 17

States that the consumer demand is inversely in proportion to the movement in price of that product, or in simple terms when consumer demand for a product goes up the price for that product goes up and when consumer demand for a product goes down the price follows. (The higher the price of an item, the less that will be demanded and vice versa)

Question 18

What factors could increase the demand of a product?

Answer 18

. effect advertising campaign
. a change in weather/seasons
. a change in fashion/taste/preferences
. and increase in income
. an in increase in price of a substitute product
. a decrease in price of a complementary product

Question 19

What are factors that could increase supply of a product? (ACE)

Answer 19

. availability of resources
. costs of resources
. efficiency of resources

Question 20

How can the availability of resources increase the supply of a product?

Answer 20

When talking about availability of resources we talk about both human and physical resources and availability of resources is important because the more resources there are, the more goods or services which are allowed to be supplied. Resources to increase supply can come in the following ways:
. increased labour force
. new discoveries of raw materials such as iron and copper
. good climatic conditions so there are more raw materials such as wheat, cotton and milk

Question 21

How can the cost of resources increase the supply of a product?

Answer 21

The cost of resources can increase supply easily. Anything that happens to reduce the costs of production leaves more money and then it's available for other resources and this leads to increased supply. Factors that can do this includes:
. lower tax rates
. lower wages for employees
. lower interest rates
. lower costs of raw materials

Question 22

How can efficiency in resource use increase the supply of a product?

Answer 22

Using resources efficiently not only saves money but also saves time. Anything that results in more adequate use being made of existing resources is classified as being used efficiently and therefore will increase the supply of a product. These benefitting factors include:

. better training of workers
. new machinery that increases productivity rates
. new production materials that reduce the amount of waste

Question 23

What are the factors of demand?

Answer 23

.Expectations
.Price of complementary products
.Price of the product itself 
.Income
.Preferences
.Price of substitutes

Question 24

What is the meaning of consumer sovereignty?

Answer 24

The situation is which the consumers is known as king because it’s where the desires and needs of consumers controls the output of the producer.

Question 25

What is a market?

Answer 25

A situation where potential buyers are I. contact with potential sellers and there is a means of exchange.

Question 26

What is a means if exchange?

Answer 26

A method of payment for goods and services

Question 28

What is the term used to describe the use of goods or services as a means of exchange?

Answer 28

Barter

Question 29

What is the law of supply?

Answer 29

The higher the price that can be gained for an item. the more that will be supplied and vice versa. The suppliers desire to maximise profit will drive their behaviour on response to a change in factors of supply. So the Law of supply states that the quantity of goods supplied by a producer is directly proportional to the movement in price of that product.

Question 30

What is the difference between goods and services?

Answer 30

Whilst both are purchasable and both can assist in people’s wants and needs the difference is that one is a physical item and one is an assistance provided.

Question 31

What is price mechanism?

Answer 31

It is a system where the producer alters process on goods and services depending on consumer demand. This is so they can make as much profit as possible. So the producer alters the price because consumers are driven by price (sales).

Question 32

What is consumer demand?

Answer 32

It is the right of the buyer to pay the actual asking price for the good or service they wish to purchase.

Question 33

What is supply?

Answer 33

The quantity of that commodity that will be provided by the producer at a particular price.

Question 34

what is an equilibrium?

Answer 34

simply where demand meets supply and the resources are used effectively (no waste) so economic supplies are being used at their most efficient level.

Question 35

What is equilibrium price?

Answer 35

The price where consumer demand equals the supply of goods; where the demand and supply intersect.

Question 36

What is an economic problem?

Answer 36

how to satisfy unlimited wants with only limited resources

Question 36

What are the three supply factors?

Answer 36

.Prices of inputs
.Price of the product
.Price of other products