The External Environment (Part 2) Flashcards
Define microeconomics
Is the study of decisions made by people and businesses regarding the allocation of resources, and prices at which they trade goods and services.
Define globalisation
Is the spread of products, technology, information and jobs across the nation.
OR
The process of integration between countries - greater flow of capital, labour, goods and services among them.
What happens if the UK does not except the deal with EU?
Would have to go onto world trade organisation (WTO) terms - 10% duty on imports and exports.
What is the G7?
Is an intergovernmental organisation made up of the world’s largest developed countries such as: France, UK, Japan, Canada, Italy, US and Germany
What is WTO?
Is the only global international organisation dealing with the rules of trade between nations.
OR
Is the only global international organisation dealing with the global rules of trade
What does the World bank predict?
Predicts that BRIC countries will over take G7 by 2035.
What are the BRIC(S) countries?
Brazil, Russia, India, (South Africa) and China
What are the MINT countries?
Mexico, Indonesia, Nigeria, Turkey
What are MINT country identified as?
The countries on the way up
Where do 40% of the world’s population live in?
In BRICS countries
What is 25% of the world’s land?
Are these 5 countries (BRICS)
Define IMF
International Monetary Fund (IMF) is an organisation of 190 countries, that oversees the IM system and monitors the financial and economic policies of its members.
What does IMF say about China?
Leading source of imports for 70 countries
What country in BRICS dominate the export of goods?
China
Russia - mostly energy (gas & oil)
What are the population sizes of MINT, Europe (inc UK) and BRICS in 2020?
MINT - 693m
Europe(inc UK) - 741m
BRICS - 3237m
What are the main reasons that have caused globalisation?
Improved transport - e.g. rapid growth in air travel -> greater movement of people and goods across the globe
Improved technology - easier to communicate and share info across the globe
Increased mobility of labour - people are more willing to move between countries in search for work
Improved mobility of capital - General reduction in capital barriers -> easier for capital to flow between different economies.
Reduced tariff behaviours - encourage global trade
What are the main factors that caused globalisation?
Technology Capital mobility Multinational companies Labour mobility Lower tariffs Improved transport
Define demand
The relation between demand and price for normal goods
OR
Economic principle - consumer’s desire to purchase goods and services and the willingness to pay a price for a specific G & S.
What does the law of demand state?
e.g. As the price of a product increases, people will want less of it
Substitution effect (-ve effect): Decrease in sales of a product - consumers switching to cheaper alternatives
Income effect (-ve affect): Is the change in demand for a G or S based on their income
What are the factors that determine the demand for goods?
Taste and preference
Disposable income
Changes in price
The expectation of future price changes
Substitute goods: Are two alternative goods that can be used for the same purpose (i.e., one £ increase -> demand for the substitute rise)
Complementary goods: Is a product or service that adds value to another (i.e., demand increase as the price of another decrease)
Define supply
The relationship between supply and price
OR
The total amount of of a specific G or S that is available to consumers
What does the law of supply state?
All other factors being equal, as the price of a G or S increases, the quantity of G or S offered by suppliers increases and vice versa.
What are the factors that determine the supply for goods?
Profitability of alternative products
More firms - increase in no. of producers will cause an increase in supply
Productivity of workers - motivated (incr in output and supply)
Government subsidies - Increase in gov subsidies will also reduce the cost of goods
Costs of production - main reasons include: technology, input prices, gov policy etc.
Environment/weather
What are the main types of market structure?
There are four main types of market structure: Perfect competition Monopolistic competition Oligopoly Monopoly
What are the market structures concentration ratio?
Perfect competition: very low CR
Monopolistic competition: <40% for the 5 firm measurement
Oligopoly: >40% for the 5 firm measurement
Monopoly: 80-100% 5 firm measurement
Define Porters fiver forces
Is a framework for analysing a company’s competitive environment
What is involved in Porter’s five forces?
Competitive rivalry, threat of new entry, buyer power, threat of substitution, supplier power
Why is Porters five forces used?
Strategic
Looks at how attractive or competitive position is of a business/market/industry
Helps organisations understand the factors affecting profitability in a specific industry, and can help to inform decisions to (i.e., increase capacity in a specific industry etc.)
