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Commerce > Economics > Flashcards

Economics Flashcards

1
Q

What are the factors of demand?

A

Tastes and Preferences
Income
Prices of related goods
Expectations
Number of Buyers

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2
Q

What are the shifters of supply?

A

Price of resources
Number of producers
Technology
Taxes and Subsidies
Expectations

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3
Q

What is market equilibrium?

A

Market equilibrium is the point in a which market supply and demand balance each other
Prices become stable
Gives opportunity to grow and increases customers.

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4
Q

What is an economy?

A

An economy is the area of production, distribution and trade, and the consumption of goods and services.

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5
Q

What is economics?

A

Economics is the study of how society uses its limited resources to satisfy the needs and wants of citizens through the production and consumption of goods and services.

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6
Q

What does economics determine?

A

What products people can buy
How much they cost
How they would be available

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7
Q

What are the assumptions of economics?

A

Human wants are unlimited.
Differentiates between ‘needs’ and ‘wants’.
Resources are limited.
Problem of limited resources being available to satisfy people with unlimited wants is called relative scarcity.

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8
Q

What does relative scarcity mean?

A

A certain resource is in short supply in one or more areas
- Inadequate or disrupted distribution
- Competing priorities

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9
Q

What is economics about if it is not all about money?

A

Analyzing and managing the problem of relative scarcity and its consequences
Studying choices people make to deal with relative scarcity.

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10
Q

List 5 ways you believe you can or do personally benefit from a strong Australian economy

A
  • Increased supply of goods and services
  • Reduced poverty
  • Higher incomes
  • Improved quality of life (through health care)
  • Increased consumption
  • Higher employment
  • Low inflations
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11
Q

List 5 possible consequences to you personally if the Australian economy become really poor.

A
  • Poorer living standards (no house)
  • Poor health care systems
  • Higher unemployment (hard to find a job)
  • Education suffers
  • Hard to buy books and pay tuition
  • Low stock in products
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12
Q

What is a labour resource?

A

These include all the human skills and effort needed to produce a good or service (waiter that brings you food)

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13
Q

What is a land resource?

A

These are the raw materials supplied by the Earth, sea or air, including forests, water and gas.

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14
Q

What is a capital resource?

A

This is the machinery, equipment, technology and facilities made by people that assist in manufacturing goods or providing a service.

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15
Q

What is an enterprise resource?

A

Qualities some people possess to be able to:
- accurately identify market opportunities
- coordinate the production process

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16
Q

Examples of each type of resource?

A

Land: Bushes, trees, dirt, water, air, grass
Labour: Teachers, students, receptionist, nurse
Capital: Classrooms, computers, clock, bathroom
Enterprise: Principal, managers/organisers

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17
Q

What is opportunity cost?

A

Opportunity cost is the value of the lost alternative use to which the economic resources could have been allocated.

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18
Q

What can opportunity cost include?

A
  • Time
  • Land, labour, capital, enterprise resources
  • Money
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19
Q

How is opportunity cost linked to relative scarcity?

A

Scarcity and opportunity cost represent two interlinking topics in economics as companies must often choose among scarce resources, and there must be a loss.

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20
Q

Define cost-benefit analysis

A

List of the costs and benefits of each alternative proposal.
Comparing them to reach a conclusion.

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21
Q

The main steps in carrying out a cost-benefit analysis?

A

Groups that affected by decision.
All costs and benefits that will occur as result of decision.
Other possible future costs or benefits that will stem from the decision but won’t impact in the near future.
Calculate total benefit and the total cost of the decision.

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22
Q

What is an economic system?

A

Means by which societies or governments organize and distribute available resources, goods, and services.

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23
Q

What is a market?

A

Where potential buyers and potential sellers meet and there is a means of exchange

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24
Q

What is a means of exchange?

A

Payment method- meaning money or bartering to trade goods and services

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25
Q

What are the three economic questions that all nations must answer?

A

What should be produced?
How should it be produced?
To whom should it be produced for?

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26
Q

What is a Planned/Command Economy?

A

Central government own and control means of production.
Control and steer the major aspects of economic production.
Decide means of production and own industries that produce goods and services.

27
Q

What role does the consumer play in a command economy?

A

Consumers shape demand by the products and services they buy or don’t buy.

28
Q

What is a Capitalist or Free Market economy?

A

A free market economy is one without government intervention or regulation. All resources are owned by individuals, rather than governments.

29
Q

What role does the government play in a free market economy?

A

property rights
environmental concerns
Regulate how products are used
Transportation

30
Q

Define cost-benefit analysis

A

Cost-benefit analysis involves making a list of the costs and benefits of each alternative proposal and comparing them to reach a conclusion.

31
Q

What types of standard of living are there, and what do they mean?

A

Material: amount of wealth, income and access to goods/services available to a group of people.
Non-material: factors that affect quality of life (not income)

32
Q

What is measurement-materially?

A

Material measure is measured by GDP or GNI per capita

33
Q

What is GDP?

A

Total amount of new goods and services produced by a country per year
Measured for economic growth
Measures material wealth

34
Q

What are the factors of non-material wellbeing?

A
  • Job satisfaction
  • Relationships
  • Health
  • Emotional, physical needs
35
Q

What does the law of demand state?

A

There is an inverse relationship between price and quantity demanded (price decreases, quantity consumers buy increases)

36
Q

Why does the demand curve slope downwards?

A

When the prices of the goods fall the old buyers tend to buy more goods than usual thereby increasing its demand.

37
Q

What is the law of supply?

A

There is a direct relationship between price and quantity supplied (price increases, quantity supplied increases)

38
Q

What is PPP?

A

Purchasing power parity is a measurement of the price of specific goods in different countries.
It is used to compare the purchasing power of other countries’ currencies.

39
Q

What are the 3 sectors?

A

Primary sector: Extract or produce raw materials (wood, fruit and vegetables, (mining and agriculture)).

Secondary sector: Transform the raw materials into goods. (transformed steel, rubber, paint into cars).

Tertiary sector: Supply services to businesses and consumers (accountant or major banking corporations).

40
Q

What is cost of living?

A

Cost of maintaining a certain standard of living.
Level of prices relating to a range of unavoidable everyday items.

41
Q

What are the economic principles?

A
  • Relative scarcity
  • Opportunity cost
  • Needs and wants
  • Supply and demand
  • Costs and benefits
42
Q

What is inflation?

A

Rate of increase in prices over a given period of time

43
Q

Two Sector Circular Flow Diagram

A
44
Q

How can governments help regulate the economy?

A

(III) inflation, interest, invest
Policies to control inflation
Manage interest rates
Investing in infrastructure and education

45
Q

What is market failure?

A

When supply does not meet demand, because too few or too many products are provided

46
Q

What are negative externalities?

A

Unwanted financial/social costs of production and consumption that spill over to third parties who are not directly involved

47
Q

What becomes inefficient when there is market failure?

A

Allocation of goods and services

48
Q

What effect do externalities have on market failure?

A

Externalities can cause market failure if price mechanism does not consider costs and benefits

49
Q

What are externalities?

A

Costs (negative externalities) or benefits (positive externalities) affecting individuals or third parties who are not directly involved in the production or consumption of particular goods and services

50
Q

What are some negative consumption externalities?

A
  • Vehicle pollution
  • Air pollution
  • Household waste
  • Traffic congestion
51
Q

Define positive externalities

A

Benefits enjoyed by third parties that results from the production and consumption decisions of others

52
Q

What are examples of positive externalities?

A
  • Vaccinations (reduces transmission of disease)
  • Research and development of new technology (enables efficiency and improves living standard)
  • Education and training (highly educated and trained people who will improve living standards)
53
Q

How does the government correct negative externalities using market based approaches?

A

Subsidy (money to promote production for a certain desired product)

54
Q

What are the types of market failure?

A

Demerit goods (alcohol, tobacco)
Public goods (non-rival and non-excludable)
Merit goods (health, education)
Market Power (monopolies)
Equity and Efficiency
Immobility of Factors of Production (regional problems, shortages)

55
Q

Describe public goods.

A

Public goods are provided by the government and defense forces. They include non-rival products and non-excludable products. Non-rival products are those which are not used without reduced the amount left for others (street lights, clean air). Non-excludable products are if you don’t pay taxes, the police will still protect you.

56
Q

What are the three parts of a business cycle?

A

Peak: Phase of economic cycle where it is likely to be high (4 or more %)
Trough: Phase of economic cycle where it is likely to be lower (can be negative)
Recession: To avoid, two successive quarters of negative GDP growth (-1.5% = recession if it happened twice [6 months])

57
Q

What impact does low economic growth have on citizens?

A
  • High unemployment rate
  • Increase in cash rate (decreased borrowing and spending of money)
  • Stagnant economy
58
Q

What impact does high economic growth have on citizens?

A
  • Debt
  • Inflation
  • Exports are more expensive (slows down outputs)
59
Q

What is the monetary policy?

A
  • controls money supply of country
  • sets official cash rate and is response to inflation
60
Q

What is full employment?

A

When all of those who are eligible to work are employed

61
Q

How does unemployment impact someone and the government?

A
  • Reduces standard of living
  • Increases stress and suffering
  • Psychological issues
  • Less money to pay for essential goods and services
  • Government needs to pay for mental health and suicide issues
62
Q

Why is there unemployment?

A
  1. Cyclical unemployment
    When business cycle slows down and workers are laid off due to lack of spending in the economy (results in growth rate BELOW 3%)
  2. Natural unemployment
    - Work is seasonal
    - Structural factors (business closes bc of no competitiveness)
63
Q

What is the budgetary policy?

A
  1. Surplus budget (has extra money to pay back debts)
  2. Deficit budget: national debt (government has to borrow from international banks and repay)
64
Q

Define: sustainable economic growth and price stability

A

measure of increase of value of goods and services in a country
when there is gradual and sustainable rise of price of goods and services

Commerce (5 decks)

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