Unspoken Laws of Business Flashcards
Macro & Micro Economics, Participants in the economy Demand Supply Movement in Demand Effects of Inflation
Definition of economics
The social science which studies and explains how scarce resources are combined & applied to satisfy unlimited need.
NB!! Most basic & fundamental economic problem that underlies all other economic problems
With what is economics concerned with
The problem of scarcity, there is not enough resources to satisfy everyone’s wants, needs and demands
What are needs described as
necessities or things that are essential for survival
What is the basic economic problem
we have unlimited needs and wants but scarce resources
What is optimal allocation choices
choosing how to spend our scarce resources wisely
What is an optimal choice
is the best choice you can make in a certain situation
What is microeconomics
focuses on individual parts of the economy
Who gets considered in microeconomics
the decisions and actions of decision makers e.g individuals consumers, households, companies, other organizations separate from the rest of the economy
What is macroeconomics
is the economy as a whole (big picture) by developing an overall view of the economic system as a whole.
What is the emphasis in macroeconomics
Total Production
Economic growth
inflation
Total unemployment
What is the five main participants in the economy
Household businesses Government Foreign sector Financial institutions
What is a market
the transactions that takes place between buyers and sellers
What is the main markets
Market for goods and services (production)
Market for production factors (land, labour and factories)
What is the flows in the economy
the flow of goods and services (production)
the flow of production factors (labour, money, land)
the flow of payment for products and production factors
What does households represent in the economy
demand for goods and services in the economy
What are the characteristics of housholds/consumers
Are consumers and buy goods/services from producers in the product market and use
the basic decision makers in terms of their consumer behavior (what to eat, wear, study)
Determine the demand
Households are the most important possessors of production factors incl labour and land, they are the entrepreneurs using their savings
What does business represent in the economy
Supply of Goods and services
What are the characteristics of a business
decision makers on the production/supply side of the product market
They try to make as much profit as possible
They are the buyers in the factors of production market
What does demand mean
The qty of goods/services buyers wish to purchase at a particular price
What does supply mean
the qty of goods/services sellers wish to sell at particular price
What is the role of the government in the economy
Collect taxes
Provide collective services as public roads & health services
Provide payments UIF, pension SASA
Provides products to consumers through product market
Uses production factors (Manpower) provided by households
What does the foreign sector consist of
importers and exporters of economic products/services and investments
What are the benefits of foreign trade
reduces and alleviate scarcity, poverty and isolation
our products can be supplied 24 hours
What is the purpose of financial institutes in the economy
they are the middleman between borrowers and lenders
