Commerce - Milestone 1

Question 1

What is a need

Answer 1

Something an individual must have in order to survive eg food, shelter, warmth

Question 2

What is a want

Answer 2

Something an individual would like to have, but is not needed to survive eg iPhone, subscriptions

Question 3

What is scarcity

Answer 3

the study on how people and groups use their limited means to obtain those things people need and want

Question 4

What are your limited means

Answer 4

Time - there is only 24 hours in a day
Skills - everyone has different abilities and levels of education
Money - no one has infinite money

Question 5

What is the opportunity cost

Answer 5

The next best alternative when a choice is made

Question 6

What does every choice make

Answer 6

An opportunity cost

Question 7

What is a consumer

Answer 7

An individual who uses goods or services for their personal use

Question 8

What is a producer

Answer 8

A person or business that makes, grows, or supplies products for sale

Question 9

What are goods

Answer 9

Products are tangible items provided for customers that have a physical existence eg clothing

Question 10

What are services

Answer 10

Acts that are provided for a consumer. They are products that have no physical existence eg haircut, transport, lawnmowing

Question 11

What is production

Answer 11

The process that transforms inputs into outputs, producing goods or services from resources

Question 12

What is the primary sector

Answer 12

involves companies that participate in the extraction and harvesting of natural products eg farming

Question 13

What is the secondary sector

Answer 13

consists of businesses that process raw materials into end products eg manufacturing

Question 14

What is the tertiary sector

Answer 14

comprised of businesses that provide services eg retail

Question 15

What is the quaternary sector

Answer 15

includes businesses engaged in intellectual activities and pursuits

Question 16

What are resources

Answer 16

the inputs used in production

Question 17

What is land

Answer 17

All natural resources used in production

Question 18

What is labour

Answer 18

the physical and mental effort used by individuals in the production process

Question 19

What is capital

Answer 19

The physical assets or man-made resources used in production eg machinery, equipment

Question 20

What is entrepreunership

Answer 20

The human ability to organise, coordinate and take risks in the production process.

Question 21

What is labour-intensive production

Answer 21

occurs in industries that use comparatively more labour than capital equipment eg retail

Question 22

What is capital-intensive production

Answer 22

occurs in industries that use comparatively more capital than labour eg manufacturing

Question 23

What are values

Answer 23

An individual’s core beliefs and principals which can determine priorities when making economic decisions

Question 24

What is consumer demand

Answer 24

the quantity of a good or service that a consumer is willing and able to purchase at a range of prices in a given time period

Question 25

What is the law of demand

Answer 25

As price increases, quantity demanded decreases , and as price decreases, quantity demanded increases, ceteris paribus

Question 26

Ceteris paribus

Answer 26

when the other determinants of demand remain constant

Question 27

What is a movement along the demand curve

Answer 27

When there is a change in price, there will be a movement along the curve. This illustrates the law of demand

Question 28

What is the shift in the demand curve

Answer 28

When the whole demand curve moves either to the right (increase) or the left (decrease). Occurs when ceteris paribus is relaxed and other determinants of demand change

Question 29

What are the determinants of demand

Answer 29

income price of substitutes price of compliments personal tastes and preferences peer pressure social media

Question 30

What is a substitute good

Answer 30

one that can be used instead of the original good eg Pepsi and Coke if the price of a substitute changes, this may make a existing good more or less attractive to the consumer

Question 31

What is a compliment good

Answer 31

one that is traditionally used with the original good eg hot chips and ketchup If the price of a complimentary good changes, this may change the demand for the existing good

Question 32

What is supply

Answer 32

the quantity of a commodity that a producer is willing and able to sell at a certain price over a period of time

Question 33

What is the law of supply

Answer 33

As the price of a good increases so does the quantity supplied, ceteris paribus

Question 34

What is market demand

Answer 34

the total quantity demanded by all consumers willing and able to buy that good/service at a point in time

Question 35

What is market supply

Answer 35

the total quantity supplied by all producers of that product at a point in time

Question 36

What is market equilibrium

Answer 36

When the quantity demanded is equal to the quantity supplied of that product

Question 37

What is a market

Answer 37

A place or situation where buyers or sellers exchange money for good and services. They may be local or international, have few buyers or many, face-to-face or online

Question 38

What is market surplus

Answer 38

Where prices are too high (above equilibrium)

Question 39

How to resolve a market surplus

Answer 39

Sellers have to lower their prices due to excess stock, price returns to equilibrium

Question 40

What is market shortage

Answer 40

When producers set their prices too low (below equilibrium)

Question 41

How to resolve a market shortage

Answer 41

Sellers can increase their prices to clear the excess demand, price returns to equilibrium