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Business Law & Accounting Control > Unspoken Laws of Business > Flashcards

Unspoken Laws of Business Flashcards

Macro & Micro Economics, Participants in the economy Demand Supply Movement in Demand Effects of Inflation

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1
Q

Definition of economics

A

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

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2
Q

With what is economics concerned with

A

The problem of scarcity, there is not enough resources to satisfy everyone’s wants, needs and demands

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3
Q

What are needs described as

A

necessities or things that are essential for survival

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4
Q

What is the basic economic problem

A

we have unlimited needs and wants but scarce resources

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5
Q

What is optimal allocation choices

A

choosing how to spend our scarce resources wisely

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6
Q

What is an optimal choice

A

is the best choice you can make in a certain situation

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7
Q

What is microeconomics

A

focuses on individual parts of the economy

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8
Q

Who gets considered in microeconomics

A

the decisions and actions of decision makers e.g individuals consumers, households, companies, other organizations separate from the rest of the economy

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9
Q

What is macroeconomics

A

is the economy as a whole (big picture) by developing an overall view of the economic system as a whole.

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10
Q

What is the emphasis in macroeconomics

A

Total Production
Economic growth
inflation
Total unemployment

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11
Q

What is the five main participants in the economy

A 
Household
businesses
Government
Foreign sector
Financial institutions
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12
Q

What is a market

A

the transactions that takes place between buyers and sellers

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13
Q

What is the main markets

A

Market for goods and services (production)

Market for production factors (land, labour and factories)

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14
Q

What is the flows in the economy

A

the flow of goods and services (production)
the flow of production factors (labour, money, land)
the flow of payment for products and production factors

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15
Q

What does households represent in the economy

A

demand for goods and services in the economy

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16
Q

What are the characteristics of housholds/consumers

A

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

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17
Q

What does business represent in the economy

A

Supply of Goods and services

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18
Q

What are the characteristics of a business

A

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

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19
Q

What does demand mean

A

The qty of goods/services buyers wish to purchase at a particular price

20
Q

What does supply mean

A

the qty of goods/services sellers wish to sell at particular price

21
Q

What is the role of the government in the economy

A

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

22
Q

What does the foreign sector consist of

A

importers and exporters of economic products/services and investments

23
Q

What are the benefits of foreign trade

A

reduces and alleviate scarcity, poverty and isolation

our products can be supplied 24 hours

24
Q

What is the purpose of financial institutes in the economy

A

they are the middleman between borrowers and lenders

25
Q

What is the most important economic principle

A

Demand & Supply

26
Q

What is the law of demand

A

the lower the price the higher the demand, the higher the price the lower the demand

27
Q

When does a demand for a product develop

A

when consumers are both willing and able to buy a product.

28
Q

What is the relationship between price and qty called

A

negative relationship

29
Q

When will the relationship between price and qty be possitive

A

when the prices are high and the demand is high and lower prices is low demand

30
Q

What is the law of supply

A

the higher the price, greater supply

lower the price, smaller supply

31
Q

Is the law of supply positive or negative relationship

A

positive relationship

32
Q

What does ceteris paribus mean

A

all other things remain constant

33
Q

What does linear mean

A

to be straight

34
Q

How should a demand and supply curve look like

A

a demand curve should always have a negative slope

a supply curve should always have a positive slope

35
Q

in which situation will equilibrium be found in economics

A

qty demands equals qty supplied
no inherent tendency to change
the market just clears

36
Q

What is equilibrium

A

when the demand and supply curves intersect

37
Q

Five main determinants of demand

A

Income of consumers

availability of substitute products

Preferences/taste of consumers

Change in price of complementary products (cars, petrol)

Expectations (filling your tank with petrol day before increase)

38
Q

Determinants of supply

A

Financial Factors

Real Factors

39
Q

How can business be funded (Financial Factors)

A

Capital contribution
Loans from third parties
profits that are ploughed back into the business

40
Q

What is real factors

A

factors that will influence all the businesses in the market

41
Q

What are the 6 real factors

A 
Better organisation/relationships of the industry
changes in the Technology of production
Change in competition
Price of production inputs
Climate/natural disaster
government policy
42
Q

What is inflation defined as

A

the sustained increase in the general level of prices

43
Q

how is the rate of inflation calculated

A

Consumer Price Index (CPI) is used to measure the rate of inflation in consumers.
The official rate of inlation

44
Q

What is the rates of inflation called

A

3-6% ideal
7-12% concerning
above 13% alarming

45
Q

What is the disadvantages of high inflation

A

Losses to savers
Losses to people with fixed income
Losses to tax payers
Confusing price signals to producers and slower expansion of business
Speculation preferred over production
Wastage of resources
Devaluation in currency (depreciation in currency)

Business Law & Accounting Control (2 decks)

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