Consumers & Businesses

Question 1

Consumer Sovereignty

Answer 1

Refers to consumers sending indicators to businesses about what to produce & how much to produce

Question 2

How can businesses limit consumer sovereignty?

Answer 2

Marketing

Misleading or Deceptive Conduct

Planned Obsolescence

Anti-Competitive Behaviour

Question 3

Average Propensity to Consume

Answer 3

The proportion of an individual’s income that is spent on consumption

APC = C/Y

Question 4

Average Propensity to Save

Answer 4

The proportion of income that is saved

APS = S/Y

Question 5

Marginal Propensity to Consume

Answer 5

Change in Consumption/Change in Income

Question 6

Marginal Propensity to Save

Answer 6

Change in Savings/Change in Income

Question 7

As income rises…

Answer 7

People tend to save a higher proportion of their income

Question 8

Factors Influencing Consumer Choice

Answer 8

Income

The Price of the Good or Service

The Price of Substitute & Complementary Goods

Consumer Tastes & Preferences

Advertising

Question 9

Sustitute Goods

Answer 9

a product that can be used in place of another (eg: butter & margarine)

Question 10

Complementary Goods

Answer 10

goods which are used together (eg: DVDs and DVD Players)

Question 11

Return for Labour

Answer 11

Wages & Salaries

Question 12

Return for Investment

Answer 12

Interest

Question 13

Return for Enterprise

Answer 13

Profit

Question 14

Return from Ownership of Housing

Answer 14

Rent

Question 15

Social Welfare

Answer 15

attempts to prevent people from falling into poverty and being unable to meet their basic needs

Question 16

Reasons for Receiving Welfare

Answer 16

Assistance to the Aged

Assistance to People with Disabilities

Assistance to Families with Children

Assistance to the Unemployed

Assistance to Veterans

Question 17

A Business Firm

Answer 17

Any organisation which uses resources to produce goods & services to satisfy consumer needs and wants in return for profit

Question 18

Industry

Answer 18

A grouping of firms/businesses that are involved in the production of the same or similar goods & services, and who usually compete with one another

Question 19

Primary Industry

Answer 19

Extraction of Natural Resources

Question 20

Secondary Industry

Answer 20

Manufacturing of Products from Natural Resources

Question 21

Tertiary Industry

Answer 21

Services that relate to the Movement of Goods & People

Question 22

Quaternary Industry

Answer 22

Gathering, Processing, and Provision of Information

Question 23

Quinary Industry

Answer 23

Personal & Domestic Services that would normally be provided in the home

Question 24

Goals of the Firm

Answer 24

Maximising Profit

Maximising Growth

Increasing Market Share

Meeting Shareholder Expectations

Satisficing

Question 25

Satisficing

Answer 25

When a firm does not attempt to maximise any particular objective but rather seeks to achieve an adequate level of attainment in each area

Question 26

Productivity

Answer 26

refers to the amount that is produced with a given amount of resources in a given period of time

Question 27

Average Output

Answer 27

Output/Resources

Question 28

Marginal Output

Answer 28

The extra output that an extra unit of resources produces

Question 29

Impact of Improved Productivity

Answer 29

Less Wastage of Resources

Lower Production Costs

Lower Prices

Increased Income

Greater Competitiveness

Question 30

Economies of Scale

Answer 30

If the average cost decreases it shows greater efficiency from increasing productive capacity

Question 31

Diseconomies of Scale

Answer 31

If the average cost increases it shows greater inefficiency from increasing productive capacity

Question 32

Internal Economies & Diseconomies of Scale

Answer 32

A result of an individual business’ decision to increase its own productive capacity

Question 33

External Economies & Diseconomies of Scale

Answer 33

A result of changes in the industry in which the business operates