introduction

Question 1

what is leisure

Answer 1

“time when not working or occupied; free time”

Question 2

what are the limitations of this definition

Answer 2

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

Question 3

what are the official measures of leisure?

Answer 3

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

Question 4

what does deloitte research inform of consumer preferences and future trends in demand?

Answer 4

• health and fitness
• holidays
• in-house entertainment
• live sport events
• eating and drinking out
• playing sports
• gambling

Question 5

what are common themes of the leisure market?

Answer 5

• 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

Question 6

what is economics

Answer 6

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

Question 7

what are resources in economics?

Answer 7

land
labour
capital
enterprise

Question 8

what is there a tension between?

Answer 8

people’s desire for goods and services which is unlimited

available resources which are limited

Question 9

what is the issue of scarcity?

Answer 9

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

Question 10

what is economics?

Answer 10

the study of how society manages its scarce resources to fulfil the unlimited needs

choices have to be made

Question 11

what is microeconomics?

Answer 11

study of how consumers and firms make decisions and how they interact in specific markets (+ impact of governments on their choices and interaction)

Question 12

what is macroeconomics?

Answer 12

the study of the effect on the aggregate economy of choices made by individuals, firms and governments

Question 13

what are the principles of economics?

Answer 13

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

Question 14

what is meant by people face trade offs?

Answer 14

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

Question 15

what is meant by the cost of something is what you give up to get it?

Answer 15

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.

Question 16

what is opportunity cost?

Answer 16

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

Question 17

what is a production possibility frontier (PPF)?

Answer 17

• 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

Question 18

what is meant by people think at the rational margin?

Answer 18

• 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

Question 19

what is meant by thinking at the margin?

Answer 19

• 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

Question 20

what is meant by people responding to incentives?

Answer 20

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

Question 21

what is meant by trade making everyone better off?

Answer 21

• 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

Question 22

what is meant by markets being a good way to organise economic activity?

Answer 22

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

Question 23

what is the invisible hand?

Answer 23

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

Question 24

what is meant by governments sometimes improving market outcomes?

Answer 24

markets don’t always lead to an optimal allocation of resources
governments may need to interfere to promote efficiency and equity

Question 25

what is meant by efficiency

Answer 25

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

Question 26

what is meant by equity?

Answer 26

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