Chapter 7: To Market To market Flashcards
(37 cards)
What are the three Economic questions?
What to produce?
How to produce?
For whom to produce?
What is opportunity cost?
.Is a decision faced by an individual or group of people, where they are torn between different options and can only pick one. When a choice is made it takes out any other options including it’s benefits
Describe the economic question “What to produce?”
As the consumer demands to buy a product, the entrepreneur coordinates the land. labour and capital resources in the production process and makes the goods, moving away from producing goods and services the consumer does not want.
Describe the economic question “How to produce?”
In the market of the economy it is the producer, as owner of the business enterprise, who devised show to produce the commodities the consumers want. the producer could of course take into account the views of consumers. In deciding how to produce, the entrepreneur will always seek to maximise profit by minimising costs as far as possible
Describe the economic question “For whom to produce?”
in setting up and running a business you have to take into consideration and determine how much to pay the workers and how this profit will be split up with business partners (if any). “For whom to produce?” refers to how the economic benefits from production will be distributed when the business is set up.
What are economic resources?
they are the inputs required by the producer to complete the production process.
What are the different types of resources?
.Land
.Labour
.Capital
.Enterprise
Describe land resources.
land resources refers to the natural resources this includes:
.fertile pastures (for crops and farm animals)
.mineral reserves (used in constriction of buildings, bridges and motor vehicles etc.)
.Forests ( which provide timber for building, specimens for medical research etc.)
.Oceans (provide fish to eat, pearls to wear etc.)
Describe labour resources.
is the person power available to work in the production process. the plumbing and electrical trades are examples of skill shortage in Australia.
Describe capital resources.
Is the machinery (equipment), plant no buildings made by people to assist in the manufacture of commodities and provision of services this includes computers, ladders, trucks, cranes, tractors, ships etc.
Describe enterprise resources.
This involves the qualities some individuals possess to accurately perceive market opportunities and effectively coordinate the production process. An example would be an entrepreneur because this is the name given to an individual who possess’ the quality of enterprise.
What is the difference between needs and wants?
To need and object it means that object is a necessity for you to survive eg. basic food such as bread and milk. Whilst if you want something it means there is a desire for you to posses that certain item but you do not need it to live or survive eg. jewellery
What is the concept of scarcity?
That we have limited resources but unlimited need and wants
What are complementary products?
complementary products are products which are designed as the name states to complement or correspond to another product and example would be iPads because their complementary product is iPad cases.
What are substitute goods?
An alternative good or service that can be used for the same purpose
what is the production process?
for producers to supply the goods and services wanted by consumers, they must set about the process of production. The production process involves the actual making of goods or provision of services. To complete this task the producer will require various economic resources, Economic resources are the inputs required by the products to complete the production process.
What is a cost benefit analysis?
It is where you evaluate options before making a decision. This analysis involves comparing the pros and cons of each options, so the best decision can be determined and chosen.
What is the law of demand?
States that the consumer demand is inversely in proportion to the movement in price of that product, or in simple terms when consumer demand for a product goes up the price for that product goes up and when consumer demand for a product goes down the price follows. (The higher the price of an item, the less that will be demanded and vice versa)
What factors could increase the demand of a product?
. effect advertising campaign
. a change in weather/seasons
. a change in fashion/taste/preferences
. and increase in income
. an in increase in price of a substitute product
. a decrease in price of a complementary product
What are factors that could increase supply of a product? (ACE)
. availability of resources
. costs of resources
. efficiency of resources
How can the availability of resources increase the supply of a product?
When talking about availability of resources we talk about both human and physical resources and availability of resources is important because the more resources there are, the more goods or services which are allowed to be supplied. Resources to increase supply can come in the following ways:
. increased labour force
. new discoveries of raw materials such as iron and copper
. good climatic conditions so there are more raw materials such as wheat, cotton and milk
How can the cost of resources increase the supply of a product?
The cost of resources can increase supply easily. Anything that happens to reduce the costs of production leaves more money and then it's available for other resources and this leads to increased supply. Factors that can do this includes: . lower tax rates . lower wages for employees . lower interest rates . lower costs of raw materials
How can efficiency in resource use increase the supply of a product?
Using resources efficiently not only saves money but also saves time. Anything that results in more adequate use being made of existing resources is classified as being used efficiently and therefore will increase the supply of a product. These benefitting factors include:
. better training of workers
. new machinery that increases productivity rates
. new production materials that reduce the amount of waste
What are the factors of demand?
.Expectations .Price of complementary products .Price of the product itself .Income .Preferences .Price of substitutes
