Theme 2: External influences

Question 1

Consumer demand

Answer 1

The levels of spending by consumers in general (not just the demand from one consumer)

Question 2

Discretionary income

Answer 2

A person’s income after deducting taxes and fixed payments such as rent and utility bills

Question 3

Economic climate

Answer 3

The atmosphere surrounding the economy (for example, gloom and doom or optimism and boom)

Question 4

GDP

Answer 4

Gross Domestic Product is the value of all the goods and services produced in a country in a year

Question 5

Real

Answer 5

Changes in money (for example, wages) excluding the distorting effect of changes in prices. So a fall in real wages might be that wages are unchanged, but prices have risen

Question 6

Recession

Answer 6

Two or more quarters of negative economic growth

Question 7

Cartel

Answer 7

An agreement between producers to control supply and thereby control prices. This is illegal, but not unusual

Question 8

Laissez-faire

Answer 8

Literally means ‘let it be’, implying leaving businesses free to choose their own policies and practices: trusting in the free market

Question 9

Collusion

Answer 9

When managers from different firms get together to discuss ways to work together to restrict supply and/or raise prices

Question 10

Non-price competition

Answer 10

All competitive strategies other than price, such as branding, product design and technological innovation

Question 11

Oligopolies

Answer 11

Markets dominated by a few large companies

Question 12

Predatory pricing

Answer 12

Pricing low with the deliberate intention of driving a competitor out of business