U2- Individual & Economy Flashcards
Rights of Consumers x5
- Right to correct information - can only make well informed decisions if protected against dishonest & misleading information.
- Right to safety - heath or lives never at risk.
- Right to free choice - choose between variety of products & services -> if no alternative must satisfy needs.
- Right to get products or services at realistic prices - price value of product or service = value consumer gets from product or service.
- Right to makes needs known - Express needs of what product & quality.
Buying & Selling x6
- Product bought - clear agreement about article between seller & buyer in all contracts of sale.
- Price paid - agreed between seller & buyer in all contracts of sale -> must be expressed as an amount of money.
- If product bought transported & freight rate charged, buyer & seller decide freight rate included in price or not.
- Local Price - not include freight rate.
- Free on rail (FOR) - seller pays freight rate to seller’s station.
- Rail charges paid - price includes freight rate.
Quality of Goods x4
- Consumers should insist on high quality products.
- Can benefit many other consumers -> refuse to buy low quality or resource wasting products or complain to producers that are not satisfactory.
- Value of Products and services should = values of community -> should complain about products or services that go against values.
- Producers who care about consumers’ needs want to know what not satisfied -> Complaints prevent malpractices -> consumers be sure of facts before complaining.
Production of Products and Services
Production Factors x4
Natural Resources - limited or scarce except crude oil & water -> SA has many natural resources -> needed to produce anything but can get resources from other countries (Japan & Taiwan do this).
Labour - physical & mental skills of workers -> need skill training & productive workers to support needs of consumers. Resources can only be effectively turned into useful items with skills and labour of workers.
Capital - Equipment & machinery needed to produce product & products produced to help produce more products -> need money to produce products.
SA economy = not viable to produce certain products -> not big enough.
Entrepreneurship - Products only produced if someone plans, organises & advises production process -> coordinates proper use of natural resources, labour & capital -> check necessary natural resources available, labours knows what to do & have enough money and machinery (capital) for production process.
Consumer & Retailer x6
- Bring products closer to consumers
- Sell according to quantity consumers require
- Grant credit -> can delay payments
- Study interests & needs -> attend personally to & help consumers choose products
- Use advertisements to notify consumers -> new products, fashion changes, price changes -> but keep trade marked products that consumers like.
- Deliver well-known trade marked products to homes
Factors witch Influence Profit
Kind of business - How much profit entrepreneur want to earn depends on business he owns & how greats consumers’ needs are for business’ products or services. Eg. English schools always in demand can afford to lower profit.
The element of risk - Degree of uncertainty differs from business to business -> greater uncertainty = higher expected profit & loss & lower uncertainty = lower expected profit & loss -> well-established businesses = less uncertainty.
Competence of Entrepreneur - Businesses that offer same products & services differ because of how competently & efficiently business is run including how well production factors are organised & managed.
Turnover & market size - Size of market place is big = business can lower profit on each product produced -> helps entrepreneur in long run -> increases turnover -> increases total profit.
High turnover = Lower prices.
New production techniques - Used by businesses motivated by competition & desire to make most amount of profit possible -> When new techniques executed = greatly increase profit. Old techniques = not much profit.
Business Cycles - When economy grows = profits generally high
When depression = more losses than profits
->value of products increases & decreases quicker than cost to make them.
Rise in unforeseen costs - irrecoverable debts, accidents, dated equipment & drop in demand & strikes -> big influence on profit.
Competition & price wars - unfair competition & price wars -> businesses close or have to lower prices.
Retailers x3
General Dealer
Found in every town or suburb
Order large variety of goods from wholesalers & sell to consumers
Services offered
Don’t have large clientele -> sell large variety of products to make profit.
Don’t specialise in specific type of product
If consumers want to by on credit only need open 1 account
Self-service shop/ Supermarket
Important & Common
Services offered Sell large variety of products. Consumers can move around freely Can compare prices before buying. Do not need many sales personnel because buy in bulk & consumers serve self Prices usually lower Prices appear on shelves -> consumers know Consumers can buy everything at 1 shop
Specialty Shop
Most common
Sells one kind of product
Services offered
Large variety of 1 kind of product
Dealers know products well -> give expert advice.
Prices not too high -> buys many of that 1 kind of product at more reasonable price than general dealer.
Entitled to profit because of service -> consumers expect profit to be reasonable in free market economy.
Competition keeps prices low.
Productivity Definition x4
- Relation between real output and amount of input used to produce output.
- Measure of input efficiency
- If output increases & input stays the same productivity increases.
- Human resources = important input factor
Money
- Generally accepted - Gold -> accepted everywhere.
- Durable - not lose value through wear & tear.
- Easy to handle - light compared to value -> paper money
- Homogenous, easy to handle, easy to divide up
- Easy to recognise - be easy to differentiate coins from other metals
- Stable - value should stay same but not always possible because inflation & exchange rate.
- Scarcity - enough to be able to efficiently exchange good -> not be too freely available or lose value
- Measure of worth - value of item determined in rands & cents
Cheques x5
- Piece of paper from cheque book from bank with instructions from holder to bank to pay money to specific person.
- Useful for transferring money from 1 place to another -> dangerous to carry a lot of money.
- Can pay people you owe a lot of money by sending cheque via post.
- Represent money -> look after & fill correctly.
- Put money in bank -> open cheque account -> receive cheque book -> make payments = to money in account.
Postal Orders x3
- Written instructions from 1 post office to any other to pay specific amount of money to a specified person.
- Have safety measures in place to ensure only named person gets money.
- Named person can exchange postal order for money at any postal office.
Credit Cards x5
- Obtain from commercial banks
- Don’t need to carry a lot of money - good for travel
- Important for getting credit
- Easier to pay by credit card than by cheque
- End of month can see everything you paid for
Budget
- Aware how much money have & what happens to it.
- Help save & make money grow to reach goals.
- Help people who:
- -feel never have enough,
- -people getting into debt,
- -people in debt
- -& people who never want these problems.
- No important what or how you earn - make most of money
Savings
- Put money into -> Savings Account -> earns interest & grows
- Amount depends on
- -How much save = more = more interest
- -Amount of time
- -Choice of bank = competition between banks = different interest rates
Bank Overdraft
- Not loan - bank doesn’t lend money
- No money in account -> bank allows to write cheques up to a certain amount agreed by bank.
- Pay for things before have money
- Pay interest on overdraft amount
