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Unit 1 & 2 Economics > Unit 1 Outcome 1 > Flashcards

Unit 1 Outcome 1 Flashcards

0
Q

What are living standards?

A

Living standards refers to how well individuals live their daily lives. This can be affected by both material and non material well being.

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1
Q

What is economics about?

A

. The study of economics is about the forces which determine how we use our limited resources wisely due to unlimited wants,
. this is to help make sure individuals and society are better off materially.
. It therefore looks at how production occurs, how resources are allocated and how proceeds are distributed.
. It also reflects the interaction between producers, consumers and governments at local, national and global level

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2
Q

Explain material well being.

A

Related to average income and consumption levels per person per year

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3
Q

Explain non-material well being?

A

Related to the quality of life as affected by such things as happiness, crime rates, the quality of the environment, urban congestion, freedom and democracy).

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4
Q

What are the 2 branches of economics?

A

Microeconomics and macroeconomics

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5
Q

What is profitability?

A

The total value of a business’ sales minus the values of business costs.

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6
Q

What are needs?

A

Needs for things are directed towards necessities of the goods and services required to survive. These essential needs include certain quantities of food, shelter and clothing.

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7
Q

what are wants?

A

Wants include desires for items which aren’t needed to survive but are to make like more enjoyable however these wants are unlimited. Items which are not essential to survive include the latest model of phone.

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8
Q

What is derived demand?

A

When a resource is only wanted due to another good good or service being purchased. eg. headphones with iphones

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9
Q

What are resources?

A

Resources are the inputs that businesses use to produce goods and services that are designed to help satisfy people’s needs and wants

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10
Q

What is gross domestic product (GDP)?

A

The total monetary values of goods and services produced by a country over a year.

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11
Q

What is productive capacity?

A

The physical limit to a nations production of goods and services that results from the availability of resources.

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12
Q

What are the different types of resources in the economy?

A

. natural resources
. labour resources
. capital resources

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13
Q

Why are our wants virtually unlimited?

A

. because when one want is satisfied another can arise (eg. new mobile phone)
. worlds population is growing
. planned obsolescence

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14
Q

What is planned obsolescence?

A

It is a policy of designing a product so it’s life is limited and becomes obsolete, meaning unfashionable or no longer functional after a period of time.

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15
Q

What are natural resources?

A

Natural resources are productive inputs which occur in nature. This includes solids for agriculture, mineral deposits, forests, native animals, oceans, climate, rivers, and clean air and environment.

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16
Q

What are labour resources?

A

Labour resources are the workers which various intellectual talents along with physical power. This can be a doctor, mechanic, retail attendant, banker, plasterer or hairdressing etc.

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17
Q

What are Capital resources?

A

Any manufactured or producer goods which are used by a firm to help make other finished goods and services. eg, highway, robot, machine, railway or factory.

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18
Q

What is the basic economic problem or assumption?

A

Relative Scarcity.

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19
Q

What is relative scarcity?

A

When a nation has limited resources available for the production of goods and services compared to people’s wants which are never ending. It arises when people’s needs and wants outweigh what can be produced.

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20
Q

What is efficiency?

A

Relates to the level of output per unit of input. higher efficiency means more production of goods and services is gained from the same or fewer resources

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21
Q

What is price?

A

Is the money cost of a good or service and is a common measure of the relative scarcity of a good or service.

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22
Q

What are economic decisions?

A

. any decisions made by individuals, firms and or governments
. about which needs and wants to satisfy
. along with what types of goods and services should be produced and bought
. (choices arise because of the economic problem of scarcity)

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23
Q

What is opportunity cost?

A

Opportunity cost is a decision faced by individuals or groups of people, where they are torn between different options however can only pick one, this is due to scarcity. To make a decisions all factors must be considered and prioritised, when a decision is made it sacrifices any other options, including their benefits.

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24
Q

What are production possibility diagrams?

A

Are used to illustrate some of the production choices available to society, in the ways resources may be used or allocated between alternative areas.

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25
Q

What is unemployment?

A

When those aged 15 and over who want jobs can’t find jobs, it causes resources to be idle and the economic to operate below capacity.

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26
Q

What is poverty?

A

It occurs when individuals have insufficient income to purchase basic goods and services and therefore do not enjoy reasonable living standards.

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27
Q

What is inflation?

A

When prices of most consumer goods and services are rising, thereby reducing the purchasing power of money.

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28
Q

What is scarcity?

A

Scarcity is basically problem in the fact that we have limited resources but unlimited wants. Demand is higher than supply of a good and or service and creates opportunity cost.

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29
Q

What are consumers?

A

An individual or group who are buyers which demand goods and services, they want low prices and high quality because they want to get as much value out of their incomes as possible.

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30
Q

What are producers?

A

Producers are business’ and supplier, they want to get the highest prices for their goods and services.

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31
Q

How are economic decisions made?

A

All nations and economies must answer 3 economic questions in regarded to the production of goods and services. These are what to produce, how to produce, and for whom to produce.

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32
Q

Describe “what to produce?”

A

What goods and services will be offered to consumers.

33
Q

Describe “how to produce?”

A

Business’ must decide how these goods and services will be made, trying to keep costs low and quality high. recently in Australia a lot of manufacturing has gone off shore.

34
Q

Describe “for whom to produce?”

A

Who will receive the benefits of the goods and services made.

35
Q

What are the 4 different economic systems?

A

. market capitalism
. planned socialism
. market socialism
. planned capitalism

36
Q

Describe market capitalism (including it’s advantages and disadvantages.

A

. private ownership of resources or business’
. PRO anyone can start a business (encourages private ownership)
. CON can make people’s income differ
. eg. most countries, Australia, USA, France, Germany, Malaysia, Japan, UK and South Africa

37
Q

Describe planned socialism (including advantages and disadvantages).

A

. government owns resources and controls basically everything
. PRO possible efficiency due to monitoring
. CON you need permission to buy a business or property and you produce what you are told to produce by government
. eg. Cuba and North Korea

38
Q

Describe market socialist (including advantages and disadvantages).

A

. government involved in planning and decisions making
. PRO consumers can make a difference to what is produced
. CON most business’ are owned but the government
. eg. used to be popular in China, Vietnam, the Ukraine, Norway and Sweden.

39
Q

Describe planned capitalism (including advantages and disadvantages).

A

. decisions making through government economic planning
. PRO planned out resources can be good
. CON private business ownership
. eg. Nazi Germany, Argentina and Italy during WW2

40
Q

What is Australia’s economic system?

A

Market capitalist economic system.

41
Q

What are the key beliefs about individual rights and economic freedom? (In Australia’s market capitalist economy)

A

. a belief in consumer sovereignty (means actions of consumers drive what the markets produce)
. a belief in private enterprise (where property and assets are largely owned by individuals and business’ rather than the government)
. a belief in the suit of self-interest (that people are free to accumulate personal wealth and seek profit maximisation)
. a belief in competition (that having business’ compete they will use resources more efficiently and keep prices down and quality high)

42
Q

What are the Australian governments objectives?

A

. strong sustainable rate of economic growth
. full employment
. low inflation
. external stability
. an equitable distribution of income and wealth
. improvements I’m general living standards

43
Q

What is privatisation?

A

The transfer of business ownership from the public (government) sector to the private sector. This can be achieved through tendering and floating the business on the ASX.

44
Q

What is the allocation of resources in Australia?

A
  • 80% to the private sector
    . owned by private enterprise (due to privatisation)
  • 20% to the public sector
    . owned by government
    . via government department no GBE
    . eg. centre link, vicroads and ambulance victoria
45
Q

Define the term market.

A

A market is a place where goods and/or services can be bought and sold at differing prices as negotiation between buyers and sellers can take place. This can be referred to as institutions or organisations to make economic decisions too.

46
Q

What are the different types of markets?

A

. pure competition
. monopolistic competition
. oligopoly
. pure monopoly

47
Q

What is pure competition?

A

When there are many producers selling the same or similar products and/or services.

48
Q

What is monopolistic competition?

A

This exists when larger numbers of distinguished firms produce a common product or service but are distinguished due to brand.

49
Q

What is an oligopoly?

A

Then larger firms control the output of an industry because level of competition becomes limited (bunnings and masters) (Coles and woolworths).

50
Q

What is a pure monopoly?

A

When a single firm controls the output of an entire industry because competition is non-existent or weak. eg. vicroads and Australia post.

51
Q

What is consumer sovereignty?

A

In markets the consumers can have great power because business’ want to maximise sales and overall profit which can only be achieved if they have customers. therefore buenos ness’ will seek to offer what consumers want to buy, hence why consumers influence through their actions and buying decisions is so powerful.

The situation is which the consumers is known as king because it’s where the desires and needs of consumers controls the output of the producer.

represents the influence consimers have through their aftpmd amd buying decisions. Business’ will seek to offer what consumers want to biy as this will maximise dales and overall profit

52
Q

What is the law of demand?

A

The law of damned states that the lower the price the greater the quantity or amount that consumers are willing to buy. this allows buyers to maximise the purchases with their income. (about consumer)

53
Q

What is the law of supply?

A

The law if supply states the higher the price the greater amount that producers are willing to supply. Thos occurs because producers want to maximise profit and higher prices help to add income. (about producer)

54
Q

What are examples or anti-competitive behaviour?

A

. price fixing (firms collaborate to set prices)
. market zoning (competing firms in same region divide market into zones and agree not to compete with each other)
. price leadership (dominant firm sets prices which competitors follow, otherwise they lose customers)
. exclusive dealing (where companies refuse to supply their products or service for no reason)
. interlocking dictatorship (when a person acting as a member of the board of directors for one company is also on the board as a director of a supposed rival company)

55
Q

What is economic growth?

A

When a nation increases the total value of goods and services produced between on wheat and the next, after allowing for inflation.

56
Q

Describe what an economic system is.

A

An institution designed to help organise the production and distribution of goods and services, and the nations income.

57
Q

What are the two main features that are used to describe all type of economic systems?

A
  1. the system of ownership

2. and the system used for economic decision making

58
Q

What is market failure?

A

. occurs when the free operation of the market price system results in poor decisions
. resources are not used in ways that maximise the general well being of society

59
Q

What is demand?

A

Represents the amount of a good and service that consumers are prepared to purchase at a given price.

60
Q

What is supply?

A

Represents the amount of a good or service that sellers are prepared to produce or sell at a given price

61
Q

What causes market prices to change? (conditions of demand)

A

. increases or decreases in household income
. increases or decreases in consumer confidence
. changes in seasons
. introduction or abolition of government laws and regulations
. increases or decreases in price of a substitute (butter v margarine) or complementary (cars and petrol) good or service
. advertising effectiveness
. some particular goods and services become unfashionable

62
Q

What are condition of demand?

A

. they are the influences on the quantity of a product or service that buyers are prepared to purchase at a given price
. When demand conditions change it shifts the whole demand line to right (increase to quantity demanded) or left (decrease to quantity demanded)

and then affecting the equilibrium price

63
Q

What causes market prices to change? (conditions of supply)

A

. increases or decreases in profitability
. increases and descends in wage costs per unit of output in an industry
. inc. or dec. in interest rates charged to loans made to business
. inc. or dec. in gov. assistance
. inc. or dec. in cost of utilities
. inc. or dec. in availability and cost of tech.
. climate conditions (floods, droughts, affects resources)

64
Q

What are the conditions of supply?

A

. they are the influences on the quantity of a particular good or service that sellers are prepared to produce or sell at a give price
. When supply conditions change, this shifts the whole supply line to the right (increase in quantity supplied) or to the left (decrease in quantity supplied), thereby affecting the equilibrium price.

65
Q

What are some strategies used by firms to increase their market power?

A 
. multiple branding (when a company sells 2 or more similar or identical products under different brand names) 
. illegal anti- competitive ways too  
  . price fixing
  . market zoning
  . predatory pricing
  . exclusive dealing
  . price leadership
66
Q

What is convergence theory?

A

it suggest that, overtime, the differences that exist between various economic systems may ten to disappear and the worlds economics will become more simile in their features.

66
Q

What is the role of households, business’ and other relevant groups in economic decisions?

A

. households affect “what” types of goods and services are produced (consumer sovereignty) (owners of resources and business’ generally follow the wishes of consumers)
. businesses affect “how” types of goods are produced (has to profitable, otherwise abandoned)
. Australia’s market system affects “for whom” to produce types of goods and services produced (only those who earn income can purchase goods and services, therefore more income the better) (people don’t have same incomes lawyer-check out staff) (government has things for fairness, welfare (p), taxes (r), minimum wage)

67
Q

When there is market failure what can the government do?

A

. the government can apply various policies to limit consumer sovereignty and thereby affect how Australia’s resources are used and why things are produced
. gov. laws a and legislation (eg. bike helmet)
. discouraging (placing taxes or restricting production for minors, alcohol)
. encouraging (incentives, concessions)
. promoting strong competition and efficiency

68
Q

What are the preconditions for pure competition in a market?

A 
. strong competition
. ease of entry
. no product differentiation 
. no government control and restrictions
. firms can maximise profits 
. good knowledge of market
. consumers behave rationally
69
Q

What are relative prices?

A

Relative prices is a concept that compares the market prices of different products or resources. for instance, if he price paid for resources rises relative to a lower price gained for the finished product, this product will become les profitable to produce.

70
Q

What is the stock market?

A

It is an institution where buyers and sellers of company stocks negotiate share prices.

71
Q

Why does the government intervene in the Australian economy?

A

Because of potential market failure.the government makes sure resources are allocated efficiently to help maximise society’s general well being and Australia’s standards of living.

72
Q

What is the Australian a Competition Consumer Commission (ACCC)?

A

The ACCC is a government appointed body created to promote competition and the increase productivity of the Australian economy. The ACCC enforces the laws on anti-competitive behaviour and also approves takeovers and merges to ensure competitiveness.

73
Q

What is the economic problem? (Relative Scarcity)

A

Needs and wants are far greater in comparison to the available resources to satisfy them. It is this competition between scarce resource and ever abundant needs and wants which is referred to as the economic problem.

74
Q

What price fixing?

A

Where firms collaborate to set prices.

75
Q

What is market zoning?

A

This is where competing firms in the same region divide the market into zones, areas or regioms and agree not to compete with eachother,,

76
Q

What is price leadership?

A

Where the dominant or leading firm sets prices which others (competitors) follow, otherwise they lose consumers/customers.

77
Q

What is exclusive dealing?

A

whee companies refuse to supply their products and/or servoces to or more firms for no reasons what-so-ever.

78
Q

What is interlocking dictatorship?

A

When a persom acting as a member of the board of directors for one company; id also on the board as a director of a supposed rival company.

Unit 1 & 2 Economics (7 decks)

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