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Business > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

What’s the equation for market share

A

Total sales/market size by value or volume

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2
Q

How do u calculate market size

A

Total sales/market share x100

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3
Q

What is perfect competition

A

Many firms with similar products competing to meet wants and needs of customers

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4
Q

What is a monopoly

A

A business who has 25% or more market share

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5
Q

Who are the people that make sure firms are treating consumers fairly

A

Competition and markets authority

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6
Q

What’s oligopoly

A

Few large firms dominating

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7
Q

What’s effective demand?

A

The quantity that people in a particular market can and will purchase at a certain price.

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8
Q

What is the equilibrium price.

A

The price consumers demand coincides with what businesses are prepared to supply

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9
Q

What happens when the demand is lower than the supply

A

The price is reduced as there are unsold stocks of goods. This creates a greater demand as the price is pulled down to the equilibrium

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10
Q

What happens when the supply is lower than the demand?

A

Shops increase their prices as consumers are prepared to pay more. Demand is pushed up towards equilibrium

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11
Q

What are some determinants of demand?

A

Price
Income
Government changes
Taste and fashion

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12
Q

What are some determinants of supply

A

Price
Cost
Taxes and subsidies
External shocks

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13
Q

What moves a consumer along a demand curve

A

ONLY PRICE. All other determinants move left or right
Price stays Same but more or less is determined at every price level.

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14
Q

What are Inferior goods

A

Demand goes down for certain goods when income rises e.g budget goods

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15
Q

What are normal goods

A

Demand goes up for certain goods when income rises

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16
Q

What’s price elasticity

A

How responsive demand is to a change in price

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17
Q

What is elastic?

A

When the change in demand that results from a price change is greater than the change in price that caused it

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18
Q

What is inelastic

A

When the change in demand that results from a price change is lower than the change in price that caused it

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19
Q

What happens when a product is inelastic?

A

Able to charge more and still similar demand. Firms revenue Will rise e.g. petrol

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20
Q

What happens when a product is elastic

A

Price goes up, demand decreases
Firms revenue Will decrease

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21
Q

What makes a product inelastic

A

Few substitutes
Cost of buying the product in proportion to the consumers income is small

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22
Q

What are some negative instances where stakeholders don’t benefit from competition within a market

A

Employees- competitive pressure to keep costs down= may negatively impact wages, hours, overtime payments
Suppliers- may be offered a “take it or leave it” approach to the conditions of supply and payment.
Shareholders- little market power, little control over prices= dividends relatively low

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23
Q

What are barriers to entry

A

They factors tgat could prevent a business from entering and competing in a market
E.g large start up costs
Legal restrictions
Inability to gain eos
Price wars from other bus. In market

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24
Q

What are barriers to exit?

A

The factors that could prevent a business from leaving a market even if it would like to.
E.g.
contracts with suppliers
High redundancy costs- employees entitled if worked for 2 years+
Difficulty of selling capital

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25
Q

What is organic growth

A

Achieved by increasing sales.

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26
Q

What is inorganic growth

A

Mergers or acquisitions

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27
Q

What are mergers?

A

2 companies joining together to form 1. Buying majority of 1 shares. Creates a new brand entity.

28
Q

What are acquisitions

A

2 bus, merging to form 1. Buying shares. But still have sepetate entity’s.

29
Q

What makes a product elastic

A

Lots of substitutes
Location of shop

30
Q

What is the price elasticity of demand

A

The responsiveness of demand for a product to a change in its price

31
Q

What is the equation for price elasticity

A

% change in quantity demanded/ % change in price
Elastic 1<
Inelastic 1>

32
Q

What’s the equation for income elasticity of demand

A

% change in quantity demanded/ % change in income

33
Q

What does the EU aim to do

A

Aims to improve the standard of living of their citizens by
Cresting large market
Generating economic + political stability
Achieving balanced economic growth
Protecting all ur citizens

34
Q

What does the single market mean

A

Makes easier to trade, creates wealth and jobs . Can trade freely with common regulations

35
Q

What trade barriers do countries have

A

Quota- restrict number of imports allowed
Tariffs- tax goods entering from abroad

36
Q

What is the aim of the single market

A

To remove trade barriers. It has harmonisation of specifications, safety standards and testing= less cost
Harmonisation of qualifications
Financial restrictions abolished

37
Q

What are the advs of the uk businesses joining the euro

A

Easier to compare prices
Less uncertainty of costs + profits
Would encourage trade- no commission for buying or selling euros.

38
Q

What are the disadvs of uk joining the euro

A

Loss of control over monetary policy. Uk can’t control their interest rate anymore
Wealthier countries would only make decisions that benefit them

39
Q

What is globalisation

A

Growth in world markets through a process of integration where it is possible to trade in a global market

40
Q

What can globalisation lead to?

A

Companies- tnc
Economies of scale

41
Q

What is trade liberalisation

A

Process where international trade becomes easier as there is a relaxation of rules

42
Q

What restrictions do govs put on imports

A

Embargoes- total ban
Quotas- fixed quantity allowed to be imported

43
Q

What are the ADvs of globalisation

A

Investment jobs and training all around the world
News and ideas spread quickly
LICs have potential to develop

44
Q

What are the disadvs of globalisation

A

Mostly for HICS
Workers exploited in lics
Jobs can be taken in hics

45
Q

Opps of globalisation

A

Larger markets and low production costs
Can take adv of tech around world

46
Q

Threats of globalisation?

A

Competition

47
Q

What are emerging markets

A

NEEs achieving rapid growth and industrialisation
Business want to grow in emerging markets as they can become a known brand where the large pops r just starting to have discretionary income.

48
Q

What is international trade

A

Exchange of capital, goods and services across the borders of diff countries

49
Q

What are the benefits of trade

A

Variety of products
Economic efficiency
Access to mills o customers
Countries can specialise in what they do best in.

50
Q

Why are there trade barriers in some countries

A

Protect own industries
Foreign competition can lead to unemployment

51
Q

What are trade blocs?

A

Group of counties in similar area that protect themselves from imports from non members

52
Q

What is a preferential trade bloc

A

Members lower but don’t eliminate barriers among themselves
They have their own policies with non-members

53
Q

What is a free trade area trade bloc

A

Members eliminate internal barriers
All agree on common policies on external barriers

54
Q

What is a customs union trade bloc

A

Eliminate internal barriers goods only
Common policies with external barriers

55
Q

What is a common market?

A

Eliminate internal barriers + comm pols with external.
Free movement of goods and people

56
Q

What is an economic union trade bloc

A

Elim in. Barriers
Same pols with ex barriers
Free move of goods, people and uniform set of economic policies

57
Q

What is full integration trade bloc

A

Everything the same e.g USA

58
Q

What is the WTO

A

World trade organisation . Try to settle trade disputes + keep peace

59
Q

What are the benefits of trade blocs

A

Acc big market
Tariffs removed- cheaper components
Eos potential
Stability bus. No longer has sales all in one area

60
Q

What are the disadvs of trade blocs

A

Have to stick to rules and regs.
Hinder trade with non members
Competition may be too big for other bus. In the bloc

61
Q

What is the exchange rate

A

The value of one currency in terms of another

62
Q

What is a strong pound

A

Get more foreign currency for the pound

63
Q

What is hot money

A

Money that flows from country to country in search of highest interest rate

64
Q

How is a business affected by growth of eu

A

Taken adv of migrant workers
Production in newer members countries

65
Q

How are businesses affected by central gov

A

Depending on political persuasion of party- may make rules
Depending on state of economy
Cma- competition markets authority- regulate markets so there’s no dominating business

66
Q

What is privatisation

A

Act of passing ownership from the public to private sectors by selling shares in the businesses
E.g British rail
Northumbrian water
Gas companies

Business (4 decks)

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