Commerce - Economics Flashcards
Economy
a system that involves the production, distribution, trade and consumption of goods and services by individuals, businesses, organisations or governments
Opportunity Cost
The value of the next best alternative use of resources
Profit
The amount of money a business earns after taking away its expenses
Revenue
The income a business receives from its businesses activities, such as the sale of goods and services to customers
Exchange Rate
The amount of one currency that can be exchanged for another at a particular point in time
Injection
Money that enters the economy
Leakage
Money that leaves the economy
Globalisation
The increasing interconnectedness of countries around the world
Commodities
Raw materials/agricultural products that can be brought and sold
Economies of scale
Savings in costs resulting from higher levels of production
Imports
Goods and services purchased from another country
Exports
Goods and services purchased by another country
Resource - Natural
Input from nature, such as water, forests or fertile land, used in the production of goods and services
Resource - Labour
A person’s intellectual or physical skills needed to produce a good or service
Resource - Capital
Input from manufactured goods, such as machines or computers, that is used to produce further goods and services
Scarcity
The idea that we have limited resources but unlimited demmand
What are the three economic questions that must be asked
- What is being produced?
- How is it being produced?
- Who is it produced for?
Economy Type - Traditional
an economic system in which people produce enough for their own needs through methods such as hunting, gathering and farming; money is not used
Economy Type - Market
an economic system in which private individuals exchange goods and services with consumers in a free marker, and, in return, keep the profit
Economy Type - Planned
an economic and political system where the government of state predominantly owns the resources and decides what goods and services to produce, how to produce them, and who they will be distributed to
Economy Type - Mixed
an economic system in which resources are owned by a mix of government and private enterprise
Participants in the Economy - Consumers
- Buy goods and services
- Earn wages and salaries
- Pay taxes
- Receive government benefits
- Save
Participants in the Economy - Producers
- Produce goods and services
- Aim to make profit
- Pay wages
- Pay taxes
- Borrow money
- Import and export goods and services
Participants in the Economy - Government
- Charge taxes
- Pay wages
- Buy goods and services
- Provide benefits, payments and services to citizens
- Borrow money
Participants in the Economy - Financial Institutions
- Hold savings
- Lend money
- Aim to make profit
- Pay taxes
How is Australia linked to the global economy?
- Trade
- Investments
- Technology and communication
Why is trade important?
- Source of income
- Provides goods and services at lower prices
- Provides access to products not made in Australia
- Opportunity to specialise in an area of expertise
