scarcity, choice and potential conflicts Flashcards

1
Q

What is the basic economic problem?

A

Resources are finite and needs/wants are infinite, so resources must be used optimally.

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2
Q

Define scarcity.

A

When there is a shortage of resources in relation to the quantity of needs/wants.

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3
Q

Define opportunity cost.

A

The loss of other alternatives when one alternative is chosen.

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4
Q

What 3 things must we consider when producing a good?

A
  • What to produce
  • How to produce it
  • Who to produce it for
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5
Q

Name a few different business objectives.

A
  • Profit maximization
  • Sales maximization
  • Survival
  • Market share maximizing
  • Customer satisfaction
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6
Q

What is profit satisficing and when might a firm choose to advocate this?

A

Occurs when a firm earns just enough profits to keep shareholders happy.
Occurs when there is a divorce of ownership and control whereby managers will make enough profits to keep shareholders happy, whilst still maintaining their own objectives.

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7
Q

What is Corporate Social Responsibility?

A

A form of self-regulation, whereby firms take responsibility for their actions that harm the environment, and aim to maximise social welfare.

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8
Q

Recall an example of Corporate Social Responsibility?

A

As global warming and climate change is becoming an increasingly worrying issue across the world, firms could attempt to reduce their carbon footprint by investing in green energy.

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9
Q

Name the different types of stakeholders (economic agents)

A
  • The shareholders
  • Employees
  • Consumers
  • Managers
  • Government
  • Suppliers
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