Y11 - Ethics Flashcards
1
Q
What are the range of Market Types: (4)
A
- Perfect Competition.
- Barriers to entry
- Monopoly.
- Quite Competitive
2
Q
A market where a business has lots of competitors…
A
Perfect Competition.
3
Q
A market where a business has no competition at all…
A
Monopoly
4
Q
Give a feature of Monopoly: (3)
A
- In Law a business with a market share of at least 25% - called a monopolist.
- One dominant firm.
- One unique product.
5
Q
Give a feature of Perfect Competition: (3)
A
- Many small firms all with extremely low market shares.
- Usually low prices.
- Advertising, branding, location may all be important to attract customers.
6
Q
Equation for Market Share:
A
Sales of 1 business
————————— X100
Total sales in market
8
Q
Could a Monopoly ever be good? (2)
A
- Developing new exciting products and technology for consumers.
- Tend to make lots of profits.
9
Q
Disadvantages to customers of a Monopoly: (2)
A
- Less choice.
- Higher Prices.
10
Q
Potential benefits of Increased Competition: (3)
A
- Lower Prices.
- More choice.
- better information for consumers allowing people to make more informed choices.
11
Q
How can competition in a market be increased? (3)
A
- New firms enter the market.
- Selling new products.
- Cutting Prices.
12
Q
Sustainability:
A
More consumers now want “green” sustainable products - means that consumption and production is sustainable.
13
Q
How can competition be decreased in a market? (3)
A
- Taking over competitions or meetings with them.
- Take out a patent or copyright.
- Internal Growth - Economies of Scale.
14
Q
Ethics places a right and…
A
Duty on the stakeholders of a business.
15
Q
Give 4 examples of Ethical Issues:
A
- Discriminating Workers.
- Pollution.
- Child Labour.
- Testing on animals.
16
Q
Ethics is…
A
About what is morally right and wrong to do.
17
Q
Social costs of Production: (3)
A
- Pollution = global warming.
- Ruining landscape.
- running out of resources.
20
Q
Give 3 advantages of an ethical approach:
A
- Customers May pay more.
- May increase sales.
- Good reputation.
21
Q
How do households and businesses make use of the environment? (3)
A
- Provides natural resources.
- Great pleasure e.g. beaches.
- somewhere to dump waste.
22
Q
How can GG Toys prevent unethical behaviour? (3)
A
- set rules and regulations.
- maximum hours & minimum wage.
- random checks.
23
Q
Give 3 problems with an ethical approach:
A
- Often increases costs.
- May lose profit.
- Can be damaging if you lie about being ethical.
24
Q
Current level of growth in the UK:
A
In the last 5 years, the UK economy has grown and average incomes have risen.
25
Q
How can the government reduce problems? (4)
A
- Taxes on products that cause damage.
- Rules and regulations - designed to prevent damage to the environment.
- Grants and tax relief towards the cost of developing greener technologies.
- Encourage recycling, set targets.
26
Q
What happens if GG Toys are accused of unethical behaviour?
A
Could negatively affect their image = result in lower sales.
27
Q
How can businesses make their shop/factory as green as possible?
A
- Dispose of waste properly e.g. recycle.
- Use renewable energy sources.
- Encourage staff to Cycle.
28
What would be the effect on GG Toys/ Tom’s Toys if the government raises income tax?
People will have less income to spend on income elastic goods (luxury’s) such as toys meaning GG Toys would suffer reduced sales and, therefore, revenue and profits.
29
Advantages of being Green: (3)
- to attract customers.
- could charge higher.
- makes it easier to retain good staff.
30
What would be the effect of higher business rates tax in Bowton? (This means businesses pay more for goods being imported and exported)
- Increased business costs and reduce profits unless they can put their prices up without losing customers or put costs down somehow.
- This would affect where a business locates - might be why GG Toys wants to move production to China where it is cheaper.
31
Link potential unethical issues with GG Toys:
“It moved production to China”
“Some job losses”
Adding to the issue of unemployment, isn’t ethical to decrease employment in Britain. What is the factory like? - they can produce at a low cost.
32
Unemployment:
The number of people in the labour force who are without a job who are actively seeking employment.
33
Disadvantages of being green:
Increased costs = reduces profitability.
34
Employment:
The number of people in the labour force who are currently employed.
35
Inflation:
An increase in prices of goods and services. In general, the price of goods and services goes up over time.
35
Give 3 reasons why the Government would spend money:
1) To provide goods and services e.g. lampposts, armed forces.
2) To help poor of unfortunate people e.g. housing benefits.
3) To help businesses e.g. grants.
36
Possible problems with GG Toys;
- poor treatment of employees.
- Pollution.
- use of non renewable resources.
37
What would be the effect on GG Toys/ Tom’s Toys if the government raises VAT?
The business will be charging a higher price for their goods/services - this would put customers good and they will be less likely to buy from the business. This results in reduced sales and profit.
39
If interest rates rise as Sundeep says, what would the impact be for customers?
- borrowing money is more expensive.
- people with variable rate mortgages will have increased payments.
- demand for price income elastic products falls.
41
What is the Business Cycle?
Over time, economies tend to go through periods of economic growth and then of recession.
42
Between 2016-2017, how much did the government receive through taxation? (4)
- Income Tax £182bn.
- VAT £138bn.
- National Insurance £126bn.
- Other £69bn.
42
Income Tax is...
A tax on income. People that pay this are: workers, sole traders etc.
43
Impact to a business in a recession: (2)
- demand for luxury falls and demand for cheaper alternative rise.
- less spending on consumer durables.
44
What would be the effect on GG Toys/ Tom’s Toys if the government decreases corporation tax?
GG Toys won’t have to pay out as much tax meaning they will have reduced costs resulting in increased profits from each sale.
45
What is the issue with the Government’s spending and receiving between 2016-2017?
They are spending more than they earn.
46
How does the Government raise money for its spending?
Through taxation.
47
Give the negative impacts of increased employment to a business: (3)
- Business May need to increase wages.
- May have to increase prices to maintain profit margins.
- Could lead to a fall in competitiveness abroad which is important as Tom’sToys is considering exporting toys.
47
Define Economic Growth:
When businesses are selling and producing more goods and services so employment and incomes rise.
48
Council Tax is...
Money households pay to the local councils for services such as bin collecting.
49
What’s it called when the economy goes down? And when it goes up?
Slump, recovery/boom.
50
Social benefits of Production:
- boosts jobs and incomes in local areas.
| - business may improve roads and infrastructure.
50
The extent of the effect on GG Toys revenue will depend on... (of high interest rates)
The extent and the length of the rise in the interest rates. The bigger the rise and longer it lasts = the bigger the impact on revenue and costs.
51
Impacts to a business during economic growth: (2)
- business will be making more goods and services.
| - more employment and greater incomes = greater sales.
51
Tariffs is...
This is a tax paid to the local council by the business on the property that they use.
52
Impacts of Inflation on Business: (3)
- Costs of raw materials.
- Employees can put pressure on work to increase wages.
- Reduced profits.
53
Between 2016-2017, what did the Government spend the most on? (5)
- Social Protection £240bn.
- Health £145bn.
- Education £102bn.
- Other including EU transactions £49bn.
- Defence £46bn.
53
Excise Duties is...
Special rates of taxes on goods we buy such as petrol, cigarettes and alcohol.
55
What is Fiscal Policy?
It is Government Taxation and Spending.
56
What would be the effect of a rise in council tax?
As people will be paying more, people may be left with less income which they are unwilling to spend on income elastic goods such as toys. Results in fewer sales and less profit.
57
Current level of inflation in the UK:
Current - 3%.
Government target - 2%
Don’t want prices to spiral out of control.
58
Corporation Tax is...
This is the tax that limited companies pay on their profits.
59
What happened between 2008-2009?
UK recession - economy was doing worse.
60
What happened during Recession? (2)
- demand for goods and services fall = Economic Growth falls.
- businesses make and produce less so employment and incomes fall.
61
Give the positive impacts of employment growing to a business: (2)
- More people working = more income to spend.
| - Increased customer confidence.
62
VAT is...
This is a tax on spending and is currently charged at 20% of the goods and services that we buy.
63
If interest rates as Sundeep says, what would the impact be on businesses? (3)
- Reduced Sales.
- more expensive for GG Toys to borrow money with a bank loan as they plan to use it to pay for machinery.
- Increased payments = Cash Flow Issues.
64
Interest Rates
The cost of borrowing money (or the reward for saving)
| The Bank of England sets the ‘base rate of interest’ in the UK = banks follow.
65
Current level of interest rates:
Current rate: 0.5% - very low so this is good for businesses.
66
National Insurance Contributions is...
What workers pay on their wages and salaries - it is used to provide health services, sick pay and state pensions etc.
67
Why does the case study say that a rise in council tax is going to happen?
To cover the cost of grants.
69
Business Rates is..
The taxes on goods that are being imported and exported.
70
Current level of unemployment in the UK:
4.3% unemployment rate. UK employment has grown.
70
How do we measure Economic Growth?
“Gross domestic product” - the total value of a country’s output.
71
What are Exchange Rates?
The price of one country’s currency in terms of another.
72
Why are exchange rates important to businesses?
Because businesses are involved in international trade.
73
Importing is...
Buying goods IN from abroad and bringing them back to the UK to sell.
74
Exporting is...
Where goods are made in the UK then shipped or transported OUT to other countries.
75
What is £100 in US dollars?
Explain how do you did it.
Exchange rate £1 = $1.5
100 x 1.5 = $150
76
What is $200 in pounds?
Explain how you did it.
Exchange rate £1 = $2
200 divide by 2 = £100
77
Who is a stronger pound good for and why?
The importer because they are getting more of the other currency for their £1/$1 etc. Less expensive to buy from a locator with that currency.
78
Who is a stronger pound bad for and why?
The exporter because it will be more expensive for them to buy from a country with that exchange rate.
79
Who is a weaker pound good for and why?
Exporters because it reduces the price that the customers would pay for the products = increasing demand.
80
Who is a weaker pound bad for and why?
Importers because they are getting less for their money.
81
A strong pound means...
That the value of the pound has gone up.
82
A weak pound means...
The value of the pound has gone down.
83
The fact that Tom’s Toys imports some of the toys it sells means...
The prices it pays for these imported supplies will be affected by the exchange rate.
84
The extent to which a change in the exchange rate would affect Tom’s Toys would depend on: (3)
- The extent of the change in the exchange rate.
- The proportion of all the toys it sells that it imports from suppliers.
- the countries where the rate has changed.
85
If a change in the exchange rate had a negative effect on Tom’s Toys, what could they do?
They could try to maintain their profit margins by finding a cheaper supplier or raising prices.
86
The extent to which demand is sensitive to changes in price depends on: (2)
If GG toys are regarded as superior, the strength of competitors etc.
87
Two types of research Tom should carry out before making a decision on whether to export toys via a website: (2)
1) market research, is there a demand?
| 2) Competitor/Cost research.
88
What is Globalisation?
This is where people,businesses and countries are becoming interconnected and interdependent.
89
What is the driving force behind Globalisation and why?
Information technology because it enables countries to move money and ideas instantly. The ways in which goods and information is being moved is easier.
90
What are the BRICS countries?
Brazil, Russia, India, China and South Africa. They are the very fast growing countries.
91
What are the problems of Globalisation for the UK? (3)
- Lower profits = forced to cut prices because of competition abroad.
- Lower sales = things are cheaper elsewhere.
- Possible business closures and loss of jobs.
92
Positive impacts of Globalisation on developing economies.... (2)
- Increase in jobs and incomes = multiplier effect.
| - Living conditions improve.
93
Negative impacts of Globalisation on developing economies... (3)
- Exploitation of workers.
- Loss of culture e.g. British factories in India.
- Pollution as goods are being transported/
94
Benefits of Globalisation to UK Consumers: (3)
- More choice and lower prices. (competition)
- Inward Investment - foreign businesses opening in this country.
- More jobs.
95
Benefits of Globalisation to UK Businesses: (4)
- Cheaper labour.
- Larger market = more customers to sell to.
- More jobs created.
- Economies of large scale: making and selling more products so average costs decrease.
96
Business activity involved on Globalisation
| International Trade
Companies in one country produce goods and services and sells it to companies in other countries.
97
Business activity involved on Globalisation
| Production Abroad
Firms may decide to set up their own factories and offices abroad.
98
Business activity involved on Globalisation
| Outsourcing Abroad
A firm in one country may pay a different business in another country to produce goods and services for it.
99
Business activity involved on Globalisation
| Multinational Corporations
Companies that have plants in different countries of the world.
100
Business activity involved on Globalisation
| Global Branding
The product becomes a brand name known and sold world wide.
101
Business activity involved on Globalisation
| People Movement
Where workers move to work in different countries.
102
Case study evidence:
| International Trade
Tom's Toys imports his toys and wants a website to export his toys. GG Toys also sells 30% of toys in Europe.
103
Case study evidence:
| Production Abroad
GG Toys has a factory in China.
104
Case study evidence:
| Multinational Corporations
NO - GG Toys only operates in 2 countries.
105
Case study evidence:
| Global Branding
Georgie Doll - the demand increased for it after a successful film.
106
Case study evidence:
| People Movement
NO EVIDENCE.
107
Case study evidence:
| Outsourcing Abroad
NO EVIDENCE.
108
Give an example of 3 UK IMPORT PARTNERS:
- Germany
- China
- USA
109
Give an example of 3 UK EXPORT PARTNERS:
- France
- USA
- Germany
110
Why has UK trade with countries developed over time?
1) trade arrangement e.g. EU
2) cultural and historical ties
3) Cost Issues e.g. cheaper abroad.
111
Give 3 examples of countries part of the EU:
UK
Austria
Germany
112
What is the EU?
A big trading organisation which embraces 28 countries and 500million people.
113
One of the main purposes of the EU is to...
Remove barriers to trade.
114
Give 5 examples of Barriers to Trade:
```
Taxes
Quotas
Exchange rates
Laws
Restricting the movement of workers
```
115
Give 3 benefits of being part of the EU:
1) larger market = more sales
2) easier and cheaper to trade with other countries, speeds up movement of goods and people.
3) can achieve economies of large scale production.
116
Give 3 disadvantages of being part of the EU:
1) increased competition because no barriers to trade.
2) common external tariff = increases costs for businesses importing supplies from outside union. (Will affect Tom’s Toys)
3) common technical standards = follow legislations etc
117
What is the euro zone?
| How much of EU members are part of the Eurozone?
Countries that have the euro currency. 19 our of 28.
118
Benefit and cost of being part of the Eurozone:
1) easier trade because no exchange rate. (POSITIVE)
| 2) loss of power in member countries e.g. governments cannot Control their own exchange rates. (NEGATIVE)
119
What are the potential problems of foreign competition? (3)
1) developing countries have lower labour costs so can make cheaper products.
2) developed countries make the same products as the UK and are very skilled and educated = can make better products.
3) Internet makes it possible for foreign businesses to provide our services.
120
Why does the UK government want UK businesses to be as competitive as possible?
To create economic growth and demand in the UK which leads to more jobs and higher incomes.
121
How can the government help UK businesses to be more competitive?
- cut taxes on business profits.
- give grants to businesses.
- cuts in income tax (so people have more to spend)
122
3 Issues for Tom’s Toys importing goods from outside and inside EU:
- the prices it pays for supplies will be affected by changes in the exchange rate.
- there is less certainty with regard to delivery times due to the distance goods have to travel.
- importing goods over long distances is bad for the environment.
123
3 benefits of Tom’s Toys setting up a website to export toys:
- it will help risk, wouldn’t be dependent entirely on one country.
- a website will provide access to the global market without fixed costs involved in opening an outlet = reduces costs and prices.
- purchasing economies of scale = lower unit costs and prices = increase profits.
124
3 challenges Tom’s Toys will have of setting a website to export goods:
- May require a change in Tom’s Toys current marketing strategies because of differences in people’s tastes, beliefs etc.
- online selling - case study says “very competitive” can put pressure on prices.
- products overseas are subject to tariffs on imports imposed by countries outside EU = would increase prices for customers.
