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ebs term 3+4 > ebs > Flashcards

ebs Flashcards

1
Q

What is the basic economic problem?

A

Unlimited wants but limited means

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2
Q

What is the law of supply?

A

Price up = quantity supplied up, vice versa

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3
Q

What is Price Skimming?

A

Price skimming is a product pricing strategy by which a firm charges the highest initial price that customers will pay and lowers it over time. As the demand of the first customers is satisfied and competition enters the market, the firm lowers the price to attract another, more price-sensitive segment.

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4
Q

What is predatory pricing?

A

Setting a price relatively low (below competition). To destroy competition and raise prices in the future. May be illegal in NZ by commerce act.

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5
Q

What is Prestige Pricing?

A

pricing goods at a high level in order to give the appearance of quality.

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6
Q

What is Loss Leading Pricing?

A

A loss leader is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services.

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7
Q

What is Penetration pricing?

A

Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price. May be perceived as ‘lower quality’.

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8
Q

What are the uses of Advertising?

A 
Builds awareness
Creates interest
Stimulates demand
Differentiates the product from its competition
Re-inforces the brand
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9
Q

Give 5 examples where ads may occur

A

Tv, Billboards, Internet, Film, Busstops etc.

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10
Q

What is AIDA?

A

Basic approach to advertising:
Attention- Catches attention
Interest- Generates some further interest/holds attention
Desire- creates a change in tastes/preferences
Action- Changes behaviour/tastes preferences towards the product = Demand+

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11
Q

What are the ‘4 Ps’ to the marketting mix?

A

Price, Place, Prommotion, Product

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12
Q

What is ‘usp’?

A

unique selling part. Specific characteristics that make a product stand out from the rest

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13
Q

What is Horizontal integration?

A

At the same stage as production

eg M/A (merger/ acquisition)

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14
Q

What is petty cash?

A

a relatively small amount of money held on the premises for use by the business. It is an asset.

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15
Q

What is GST on the left hand side of the trial balance?

A

An asset

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16
Q

What is GST on the right hand side of the trial balance?

A

A liability

17
Q

What is the equation for Assets?

A

Owner’s equity + Liabilities

18
Q

What is maximum price control?

A

A maximum price means firms are not allowed to set prices above a certain level. The aim is to reduce prices below the market equilibrium price. The advantage is that it may lead to lower prices for consumers. Creates shortage

19
Q

What is minimum price control?

A

Means firms are not allowed to set prices below a certain level. Set above the market equilibrium and protects producers incomes. Creates surplus

20
Q

What is a subsidy?

A

A payment from the government to a producer of a good/service that lowers cost of production. May lead to lower prices for consumers and higher revenue for producers

21
Q

What is Koha?

A

Koha is a New Zealand Māori custom which can be translated as gift, present, offering, donation or contribution.

22
Q

What are the 4 main functions of money?

A

Medium of exchange
Unit of account (or standard of value)
Store of value
Means of deferred payment

23
Q

What are some of the characteristics of money?

A 
Divisible
Recognisable
Portable
Durable
Acceptable
Legal Tender
Scarce (relatively)
24
Q

What is it meant by ‘medium of exchange’?

A

Money facilitates exchange (makes exchange easier and more efficient)

25
Q

What is meant by ‘unit of account’?

A

Money compares value

26
Q

What is meant by ‘store of value’?

A

Money holds value over time but is eroded by inflation

Can be off set by interest earned

27
Q

What is meant by ‘means of deferred payment’?

A

Money can be used as credit
usually be an interest charged
-cover inflation
-reflect relative risk

28
Q

What is working capital?

A

Current assets : current liabilities

the greater the difference between the two the better (when CA > CL)

ebs term 3+4 (1 decks)

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