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Y11 Economics: Module 1+2 > Businesses > Flashcards

Businesses Flashcards

(48 cards)

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1
Q

what are firms? as in what do they do with inputs and outputs

A

transform inputs into outputs

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2
Q

what are the 4 types of firms?

A
  • sole traders
  • partnerships
  • private companies
  • public companies
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3
Q

what is a sole trader?

A

one trader with unlimited liability

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4
Q

what is a partnership?

A

2-20 owners, unlimited liability

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5
Q

what is a private company?

A

1-50 owners, shareholders have liability

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6
Q

what is a public company?

A

5 or more owners

listed on the ASX and all company’s information is available online

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7
Q

what is the IPO?

A

initial public offering.. when private companies first turn public and issue shares to the public

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8
Q

5 types of industries?

A

primary
secondary
tertiary
quaternary
quinary

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9
Q

what is the primary industry?

A

extraction of raw materials

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10
Q

what is the secondary industry?

A

manufacturing of raw materials

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11
Q

what is the tertiary industry?

A

services.. eg marketing, retail

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12
Q

what is the quaternary industry?

A

processing and supply of info, e.g teaching, banking

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13
Q

what is the quinary industry?

A

provision of household services

e.g hotels, restaurants

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14
Q

what are a firm’s 3 production decisions?

A

what to produce, how much to produce, how to produce

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15
Q

how does a business decide what to produce?

A

what consumers are willing to buy
how much profit they would make

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16
Q

how does a business decide what quantities to produce?

A

consumer demand

cost and availability of resources

natural factors

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17
Q

how does a business decide how to produce products?

A

most efficient and effective combination of factors of production

should they have more machinery or more labour?

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18
Q

what is economic growth? how is it measured

A

changes over time in levels of GDP; value of all final goods and services produced in a country

change in real GDP/ last year’s GDP

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19
Q

what is real GDP?

A

GDP that takes into account of inflation

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20
Q

is nominal GDP increases by 6%, and inflation is 2%, what is the real GDP?

21
Q

what are the 5 main goals of a firm?

Study These Flashcards
A
  • maximising profits
  • maximising growth
  • increasing market share
  • meeting shareholder expectations
  • satisficing behaviour
22
Q

what is maximising profit?

Study These Flashcards
A

making the most income

23
Q

what is maximising growth?

Study These Flashcards
A

businesses growing larger and accumulating more assets to increase profits in the future

24
Q

what is increasing market share?

Study These Flashcards
A

gaining a larger proportion of total sales within a specific market

25
what is meeting shareholder expectations?
shareholders have say in business decisions as they help fund the, thus shareholders must be pleased by business decisions before major changes are made
26
what is satisficing behaviour?
businesses have many targets they want to achieve, so they may have to forgo some goals to achieve many of them adequate over optimal
27
why does a business have to be efficient?
lower costs and increase profits
28
what is allocative efficiency?
allocate resources to provide greatest benefits
29
what is dynamic efficiency?
adapt to needs of changing market
30
what is operational/ productive efficiency?
least amount of resources at the lowest cost
31
what is productivity>
output per unit of input
32
costs are reduced when the scale of production is _____
increased
33
what are the fixed costs a firm has to pay?
costs that have to be paid before the first customer makes a purchase, e.g furniture, machinery, marketing
34
increasing returns to scale: average cost of production falls with increased ____
output
35
average cost rises, ____ return to scale
decreasing
36
what are the 4 economies to scale categories?
- internal economies of scale - external economies to scale - internal diseconomies to scale - external diseconomies to scale
37
what is an internal economy of scale? example?
businesses lower their cost of production and make a greater revenue due to factors inside their business/ under their control for example, bulk buying, specialising of workers
38
what is an external economy of scale? example?
businesses lower cost of production/ increase revenue due to factors outside of the business/ beyond their control provided by growth of other businesses/ government examples: improvements in transport links; skilled labour force; suppliers and intermediaries established close to growing industry; competitors develop new procedures, region gets certain reputation for producing good quality of goods (e,g Hunter Valley)
39
what is an internal diseconomy of scale? example?
cost increases for a firm due to qualities within the firm examples: less skilled workers, organisational skills, management loses touch with workers, congestion in production line, tasks become duplicated by different departments
40
what is an external diseconomy of scale? example?
factors outside of the business create an increase the average cost examples: traffic problems (too many businesses in one area); demand increases--> resources remain and cost increases; limited space for new firms and businesses; gov regulations
41
increasing productivity:
increasing output with the same resources the same time
42
is increasing productivity a goal for a business? why?
yes, it decreases costs and satisfies more wants with same level of resources
43
how can a business increase productivity?
division of labour location of industry large scale production
44
what is division of labour in productivity?
assembly line
45
what is location of industry in productivity?
concentrate workplace in appropriate industrial area
46
what is large scale production in productivity?
specialised capital equipment to speed up production
47
how can productivity improve standard for living? (3)
Wasting less resources Decreasing production costs Increasing business profits Decreasing inflation Increasing incomes Increasing international competitiveness
48
3 things that investments, technological change and ethical decision making impact...
Production methods Price Employment Output Profits Types of products Globalisation Environmental sustainability

Y11 Economics: Module 1+2 (5 decks)

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