economics unit 1 aos 2

Question 1

the law of demand

Answer 1

the law of demand states that at a higher price consumers will demand a lower quantity of the good or service

Question 2

the law of supply

Answer 2

states that a higher price leads to a higher quantity supplied and that lower prices lead to lower supply.

Question 3

pure or perfect competition and example

Answer 3

Pure competition is a market structure where many sellers offer the same products for similar prices. In pure competition markets, corporations have little control of a product’s price.
balloon manufacturers.

Question 4

pure or perfect monopoly and an example

Answer 4

A pure monopoly is a market structure where one company is the single source for a product and there are no close substitutes for the product available. There are many barriers to entry and this market is considered less efficient than others.
Public utilities: gas

Question 5

monopolistic competition and example

Answer 5

Monopolistic competition is a type of market structure where many companies are present in an industry, and they produce similar but differentiated products. there are quite a few firms in the market.
clothing items.

Question 6

oligopoly and example

Answer 6

An oligopoly is when a few companies exert significant control over a given market. Together, these companies may control prices by colluding with each other, ultimately providing uncompetitive prices in the market.
airlines.

Question 7

equilibrium

Answer 7

exists when the quantity demanded is the quantity supplied.

Question 8

relative prices

Answer 8

the price of a good or service in terms of another

Question 9

demand factors

Answer 9

disposable income, intrest rates, price sensativiety,

Question 10

supply factors

Answer 10

cost of production, change in price of good or service

Question 11

perfect market

Answer 11

Perfect competition is where there are many buyers and sellers, homogeneous products, and no one firm has the power to influence prices. This scenario leads to prices closely reflecting marginal social costs, maximizing economic efficiency

Question 12

pure market

Answer 12

A system in which economic decisions. about production and price are made. by producers and consumers, involving. little government intervention.

Question 13

expansion

Answer 13

a period in which national levels of of production and employment are rising

Question 14

contraction

Answer 14

a period which nation level of production and employment are decreasing

Question 15

substitute goods - 2 examples

Answer 15

A substitute good is a product that can be used as a replacement for another product because it serves the same purpose. If the price of one product goes up, people may choose to buy the substitute instead, which can lead to a decrease in demand for the original product
-Butter and margarine
-Tuna and salmon

Question 16

complementary goods
-1 example

Answer 16

are those goods and services which demands are linked in a positive way. For instance, a rise in the demand for tea may tend to cause a rise in the demand of milk and sugar.

Question 17

intrest rates

Answer 17

An interest rate is the price paid for money
that has been borrowed, expressed as a percentage

Question 18

market equilibrium

Answer 18

Market equilibrium is a market state where the supply in the market is equal to the demand in the market.

Question 19

shortage

Answer 19

is a condition where the quantity of a product or service demanded is greater than the quantity supplied at the market price.

Question 20

surplus

Answer 20

the simple state of supply outweighing demand.

Question 21

market mechanism

Answer 21

is the system of decision making whereby the free forces of supply and demand for particular goods and services operate to set relative prices at the point of market equilibrium.

Question 22

price signal

Answer 22

help to make key economic decisions in a market economy by creating incentives for the owners of resources.

Question 23

relative price

Answer 23

Relative price is the price of a good or service in relation to the prices of other goods and services.

Question 24

price discrimination

Answer 24

the action of selling the same product at different prices with small variation to different buyers, in order to maximize sales and profits.

Question 25

multibranding

Answer 25

A multi-brand strategy means having a portfolio of products with different brands or names, all owned and managed by the same company, produced in the same factory. Increases shelf space

Question 26

anti-competative behaviour

Answer 26

Anticompetitive behavior refers to actions taken by a business or organization to limit, restrict or eliminate competition in a market, usually in order to gain an unfair advantage or dominate the market.

Question 27

Competition and Consumer Act 2010

Answer 27

regulates fair trading in Australia and governs how all businesses in Australia must deal with their customers, competitors and suppliers.

Question 28

economic stabilisation

Answer 28

Economic stabilisation by the government involves deliberate actions or policies to reduce the severity of peaks and troughs within the business cycle.

Question 29

an increase in economic activity

Answer 29

An increase in economic activity involves an increase in the demand for goods and services and businesses raising levels of production