scarcity, choice and potential conflicts Flashcards
What is the basic economic problem?
Resources are finite and needs/wants are infinite, so resources must be used optimally.
Define scarcity.
When there is a shortage of resources in relation to the quantity of needs/wants.
Define opportunity cost.
The loss of other alternatives when one alternative is chosen.
What 3 things must we consider when producing a good?
- What to produce
- How to produce it
- Who to produce it for
Name a few different business objectives.
- Profit maximization
- Sales maximization
- Survival
- Market share maximizing
- Customer satisfaction
What is profit satisficing and when might a firm choose to advocate this?
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.
What is Corporate Social Responsibility?
A form of self-regulation, whereby firms take responsibility for their actions that harm the environment, and aim to maximise social welfare.
Recall an example of Corporate Social Responsibility?
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.
Name the different types of stakeholders (economic agents)
- The shareholders
- Employees
- Consumers
- Managers
- Government
- Suppliers