Economics final

Question 1

what is a planned economic system? (command economy)

Answer 1

an economic system where the government determines everything economic (like what goods and services to produce, their prices and how they are allocated)

Question 2

what is the main motive for a planned economic system?

Answer 2

social welfare, therefore they produce goods that will be the most beneficial to the social welfare and social aspect for the economy

Question 3

what are the advantages and disadvantages for a planned economic system?

Answer 3

advantages:
- less inequality
-low unemployment rate
-profits used to expand production

disadvantages:
- inefficiency and wastage of resources
-lack of technological progress
- loss of individuality

Question 4

what is a mixed economic system?

Answer 4

an economic system where the market economy (people) is combined with government planning and the public sector has ownership over resources and provision of goods and services
-both public and private sectors exist
- planning and final decisions are made by the govt while the market system decides where resources are allocated

Question 5

what are the advantages and disadvantages of a mixed economic system?

Answer 5

advantages:
- provides useful and essential goods and services
-provides it for the people in the greatest need
- it can outlaw business practices that restrict competition or mislead consumers

disadvantages:
- focuses and emphasizes more on profit
-gap between the poor and rich
- exploitation of labor

Question 6

what is the aim for private sector firms?

Answer 6

to maximize their profit

Question 7

what is the difference between private costs and private benefits? (examples)

Answer 7

private costs are costy for the consumer whereas private benefits are more beneficial for the consumer

private costs are like wages and rents whereas private benefits are sale of products to consumers

Question 8

what is the difference between external costs and external benefits? (examples)

Answer 8

external costs are costs to people but not to the ones who caused the harm for example fires

external benefits are benefits to both sides like farming

Question 9

what is the difference between social costs and social benefits? (examples)

Answer 9

social cost:
total social cost = private costs + external cost

social benefits:
total social benefit= private benefit + external benefit

Question 10

what happens if total social benefit is > total social costs?

Answer 10

production and consumption is very beneficial towards economic welfare

Question 11

what happens if total social cost is > total social benefit?

Answer 11

production and consumption is very harmful towards economic welfare

Question 12

what is the corporate social responsibility (CSR)?

Answer 12

business model where companies make an effort to work and operate in ways that enhance and benefit society and the environment

and it helps with both society and the brand image of companies

Question 13

what are at least 5 goals towards sustainable development?

Answer 13

1- no poverty
2- zero hunger
3- quality education
4- gender equality
5- sustainable cities and communities

Question 14

what is market failure?

Answer 14

• the market forces of demand and supply are unsuccessful in allocating resources efficiently which causes external cost and benefits

(where producers and consumer are very hyper fixated on their stuff that they ignore the negative effect it has on others)

Question 15

what are the 6 causes of market failure?

Answer 15

1- social costs exceeds social benefit
2- over-provision (over production) of demerit goods like alcohol
3- under-provisions (under production) of merit goods like education and health
4- lack of public goods
5- immobility of resources (wasted)
6- info failure

Question 16

how to correct market failures?

Answer 16

reduce external costs and increasing external benefits

Question 17

how to reduce external costs?

Answer 17

by increasing taxes on firms with activities that create external costs and increase price of harmful products like plastic bags

Question 18

how to increase external benefits?

Answer 18

• ensure public sector provision of socially and economically desirable goods like free education and free vaccines
• encourage private sectors to recycle and use renewable energy
• encourage the change of production methods

Question 19

what is a market?

Answer 19

market is where a good or service has producers and consumers

Question 20

what is demand?

Answer 20

the want for consumers to buy a product

Question 21

what is effective demand?

Answer 21

when consumers have enough money to buy the product they want

Question 22

what controlles the rise and fall of demand?

Answer 22

for demand to rise the price must fall and for demands to fall a price must rise
(indirectly proportional)

Question 23

does a demand curve slope upwards or downwards?

Answer 23

downwards

Question 24

what are substitutes and complements? (examples)

Answer 24

substitutes are bdal example is bus bdal taxi

complements are things that complement each other like car and gas

Question 25

6 factors that create a rise in demand? (fall of price)

Answer 25

1- increase in disposable income after tax
2- rise in price of substitutes
3- fall in price of compliments
4-fashion favors the product
5- increase in advertising
6- rise in population

Question 26

6 factors that create a fall in demand? (rise of price)

Answer 26

1- decrease in disposable income after tax
2- fall in price of substitutes
3- rise in price of compliments
4-fashion favors other products
5- decrease in advertising
6- fall in population

Question 27

when does the market demand curve shifts inwards and outwards?

Answer 27

outwards when their is a rise in demand and inwards when there is a fall

Question 28

what is supply?

Answer 28

willingness of firms to create a product available for consumers

Question 29

when does the supply increase and decrease?

Answer 29

supply (quantity supplied) increases when price rises as it becomes more profitable

decreases when price falls as it becomes less profitable
(directly proportional)

Question 30

what are 4 causes for a rise in supply?

Answer 30

1- other products become less profitable to produce
2- fall in cost of factors of production
3- increase in the supply of resources
4- increase in business optimism

Question 31

what are 4 causes for a fall in supply?

Answer 31

1- other products become more profitable to produce
2- rise in cost of factors of production
3- decrease in the supply of resources
4- decrease in business optimism

Question 32

when does the market supply curve shifts inwards and outwards?

Answer 32

outwards when their is a rise in supply and inwards when there is a fall

Question 33

what are the 4 different types of business organization?

Answer 33

1- sole trader
2- partnership
3- joint-stock company
4- multinational
(SPJM)

Question 34

what is the sole trader?

Answer 34

when a business is owned and controlled by one person and has unlimited liability which means he is reponsible for all debts and makes all the profits

Question 35

what are the 4 advantages and disadvantages of being a sole trader?

Answer 35

advantages:
1- their own boss
2-choose hours of work
3- receives all profit
4- easy to set up

disadvantages:
1-may loose revenue on days with no work
2- unlimited liability
3- full responsiblity
4- may lack capital to grow business

Question 36

what is partnership business organization?

Answer 36

a legal agreement between 2 or more people to run a business

Question 37

what are the 5 advantages and 4 disadvantages of being in a partnership?

Answer 37

advantages:
1- easy to set up
2- more partners means more capital
3- partners bring new skills
4- limited partners means limited liability
5- shared responsibilty

disadvantages:
1- may cause disagreements
2- shared profits
3- general partners means unlimited liability
4- some partners may lack captial

Question 38

what is a joint stock company?

Answer 38

a company where shareholders who have limited liability are the owners, and these companies sells shares and parts of their ownership to raise permanent capital (separate legal identity)

Question 39

what are multinational companies?

Answer 39

firm/business that operates in more than one country and are some of the largest companies example mcdonalds and target

Question 40

what are 4 characteristics of multinationals?

Answer 40

1- huge global customer base
2- minimize transport costs by having a branch near resources
3- minimize wage costs
4- raise significant capital for business expansion

Question 41

what is the SWOT analysis?

Answer 41

tool that helps in analyzing what your company does best and create successful strategies for the future and negatives like competitors

Question 42

what does SWOT stand for?

Answer 42

Strength
Weakness
–(internal environment of company)
Opportunities
Threats
–(external environment of company)