External Environment Flashcards
What is the external environment?
The external environment is the change in environment which the business can’t have any effect on
What are 3 types of goods?
inferior
luxury
deluxe
How do we work out income elasticity?
Change in quality of demand % / Change in income.
What happens if the YED is >1%
Luxury
What happens if the YED is 0-1
Normal
What happens if the YED is negative?
Inferior
What products in demand would be strongly influenced by the change income levels?
Luxury things like chocolate, deluxe hotels etc
What products in demand would not really be influenced by the change in income levels?
Inferior goods like eggs milk or bread etc
What happens when rising interest?
People save more and spend less
What happens when interest levels decrease?
People spend more and save less
What is inflation?
The rising of price level over time
What does appreciation do to the value of the pound?
It would increase
What does depreciation do to the value of the pound?
It would decrease
If the strength of the pound is weaker what does the business want to do more of?
Exporting
If the strength of the pound is stronger what does the business want to do more of?
Importing
