introduction Flashcards
what is leisure
“time when not working or occupied; free time”
what are the limitations of this definition
binary definition
travelling to work, shopping & housework are for many not leisure activities
leisure is time spent away from business, work, domestic chores & education
leisure then gives pleasure - known as utility by economists - depends on individual preferences
what are the official measures of leisure?
office for national statistics publishes social & economic data for the UK
leisure includes: participatory activities; socialising; cultural activities; resting and taking time out; sports and outdoor pursuits; hobbies, computing and games; mass media; eating out
leisure excludes: paid work or study, activities necessary for existence such as sleeping or eating (apart from restaurants, pubs and cafes); travel related to the previously listed activities
what does deloitte research inform of consumer preferences and future trends in demand?
- health and fitness
- holidays
- in-house entertainment
- live sport events
- eating and drinking out
- playing sports
- gambling
what are common themes of the leisure market?
- all above are markets where goods and services are being traded
- consumers are buyers - making decisions on what & how much to consume
- firms are supplying these goods and services
- economics divides the market into buyers and sellers
- two key characteristics of the market emerge: quantity and price
what is economics
economy is a greek word meaning one who manages a household
economies are similar to households with decisions to make about;
- how many farmers are needed
- who should become a farmer
- how much resources to allocate to the sports and leisure sectors
what are resources in economics?
land
labour
capital
enterprise
what is there a tension between?
people’s desire for goods and services which is unlimited
available resources which are limited
what is the issue of scarcity?
society will never have enough resources to produce the goods and services that will satisfy the needs of all its citizens
given scarcity, it is important to manage them well and make the right decisions
what is economics?
the study of how society manages its scarce resources to fulfil the unlimited needs
choices have to be made
what is microeconomics?
study of how consumers and firms make decisions and how they interact in specific markets (+ impact of governments on their choices and interaction)
what is macroeconomics?
the study of the effect on the aggregate economy of choices made by individuals, firms and governments
what are the principles of economics?
people’s decisions:
1. people face decisions
2. the cost of something is what you give up to get it
3. rational people think at the margin
4. people respond to incentives
people’s interactions
5. trade can make everyone better off
6. markets are usually a good way to organise economic activity
7. governments can sometimes improve economic outcomes
what is meant by people face trade offs?
to get one thing we like, we usually have to give up another thing we like or “there is no such thing as free lunch”
e.g.:
- time spent studying versus watching movie
- buying board games versus food
what is meant by the cost of something is what you give up to get it?
because people face trade-offs and make choices, they must compare the costs and benefits of each action. Sometimes the cost of an action is not as obvious as may appear.
what is opportunity cost?
the highest-valued alternative that must be given up to obtain something
good decision when value of choice > opportunity cost
opportunity cost = implicit cost + explicit cost
what is a production possibility frontier (PPF)?
- shows us the maximum level of output we can produce of both goods when we employ all our labour resources in different combinations.
- it tells us the trade-offs involved: if we wish to produce more leisure goods, we must move labour from the non-leisure sector and therefore less non-leisure goods are produced
- it shows us that societies have choices to make on how to use scarce societies
what is meant by people think at the rational margin?
- in economics, we study behaviour of consumers and producers
- we usually assume that consumers and producers behave rationally
- rational behaviour refers to a decision-making process that is based on making choices that produce the best outcomes for themselves
rationality has boundaries
what is meant by thinking at the margin?
- marginal changes: small incremental adjustments to a plan of action
- in many situations decision makers will make the best decision by thinking at the margin (=’edge’)
- a rational decision maker takes an action if the marginal benefit of the action exceeds its marginal cost
e.g. buying another pint, watching a TV show for another hour, airlines and standby passengers
what is meant by people responding to incentives?
people make decisions by comparing costs and benefits -> behaviour may change when costs and/or benefits change
e.g. change in price -> change in buying behaviour
change in grading scheme -> change in class attendance
change in sear belt regulations -> change in driving behaviour
what is meant by trade making everyone better off?
- trade is not like a competition where theres loss and win
- trade allows each person to specialise in the activities they do best
- by trading with others, we can buy a greater variety of goods and services at lower costs
- countries who trade with other countries experience higher standards of living
what is meant by markets being a good way to organise economic activity?
a market economy is an economy that allocates resources through the decentralised decisions of many firms and households as they interact in markets for goods and services:
- households decide what to buy and who to work for
- firms decide who to hire and what to produce
what is the invisible hand?
Adam smith observed that households and firms interacting in markets as if guided by an invisible hand.
- houses and firms look at prices when deciding what to buy and sell, they take into account social costs of their actions
- as a result, price guide decision makers to reach outcomes that tend to maximise welfare of society
what is meant by governments sometimes improving market outcomes?
markets don’t always lead to an optimal allocation of resources
governments may need to interfere to promote efficiency and equity
what is meant by efficiency
society gets the most that it can get from scarce resources
market failure occurs when the market fails to allocate resources efficiently potentially caused by:
- an externality, an impact of one person or firm’s actions on the well-being of a bystander
- market power, what is the ability of a single person or firm to unduly influence market prices
what is meant by equity?
benefits of those resources are distributed fairly among the members of society
the invisible hand is even less able to ensure a fair distribution of economic prosperity
- a goal of many government interventions is to achieve a more equitable distribution of economic well-being e.g. income tax
