Unit 1 Basic economics Flashcards
<p>What is the definition of opportunity cost</p>
<p>The value or cost of a product you miss out on when you choose another item. It is the next best thing and as money is a scarce resource you could not afford both. </p>
<p>What is the difference between value and satisfaction </p>
<p>Value is the worth of something represented by the amount of money someone is willing to pay for it.
Satisfaction is the enjoyment received by consuming or receiving a product and is NOT always constant.</p>
<p>What is the definition of price sensitivity </p>
<p>How much the demand changed for a product as a result of a price change. It may depend on the availability of different substitutes.</p>
<p>What is the definition of a stakeholder</p>
<p>A person who is affected by a business's decisions. They can be affected financially, emotionally and socially.
Shareholders ARE stakeholders but stakeholders are NOT ALWAYS shareholders.</p>
<p>What is the definition of a negative externality</p>
<p>And negative externality is when a business or individual inflicts a COST on other stakeholders and DOESN'T compensate them for it.</p>
<p>What is the definition of a competitive advantage </p>
<p>Any factor that helps a business succeed when competing with rivals.</p>
<p>What are the four ways of gaining a competitive advantage </p>
<p>Conducting market research
Having creativity.
Cutting and controlling costs
Having good leadership.</p>
<p>Why do businesses lose competitive advantages</p>
<p>They lose touch with customer needs
They have a loss of productivity
They may be faced with increased competition
The market condition are changing </p>
<p>What is the difference between cash and profit</p>
<p>CASH is the money within a business within a sIngle point in time that the business has access to.
PROFIT is the money within a business over a period of time.</p>
<p>What is the definition of cashflow</p>
<p>The flow/ movement of cash within a business. It includes what goes in and out.</p>
<p>What causes cashflow problems</p>
<p>Increased competition, varying demand, late payments from customers, fixed costs and an increase of suppliers prices.</p>
<p>With bad cashflow businesses can't....</p>
<p>Advertise, buy stock, pay loans, pay employees, expand, afford to pay bills or pay suppliers.</p>
<p>What are the main ways that the success of a business can be measured </p>
<p>Survival- how long it has been trading
Revenue- the total amount of sales in a period of time
Profit-revenue - costs
Market share- the amount of revenue as a percentage of the whole market
Corporate Social responsibility- what the business does for the environment or charitable organizations.
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What is the definition of resources
Things that are needed to satisfy wants
What is the definition of scarce resources
A situation where there aren’t enough resources for everyone to get what they want all of the time.
