External Influences

Question 1

Define competition

Answer 1

rivalry between sellers

Question 2

define market

Answer 2

only situation where buyers and sellers are in contact to establish price

Question 3

define the difference between physical and non-physical markets

Answer 3

p: offers personalisation, physically meet

n-p: convenient, don’t meet physically

Question 4

define mark up

Answer 4

difference between cost of production and selling price

Question 5

what is ‘market price’?

Answer 5

price range customers are prepared to pay

Question 6

What are the types of market?

Answer 6

monopoly, competitive, oligopoly,

Question 7

what is economies of scale?

Answer 7

arise when unit costs fall as output rises

Question 8

what is dis-economies of scale?

Answer 8

arise when unit cost rises as output falls

Question 9

define competitive market.

Answer 9

large number of sellers, mainly based on price (6 t shirts)

Question 10

define monopoly market

Answer 10

dominated by one seller, needs 25% share of market

Question 11

define oligopoly market

Answer 11

market is dominated by a few firms, prices kept similar to keep customers, all follow suit of each other

Question 12

what is monopolistic competition?

Answer 12

• large number of businesses
• products are branded
• customers have loyalty
• offer non-price diff

Question 13

define market size

Answer 13

no. of individuals in a market who are potential buyers of a products/service

Question 14

define market growth

Answer 14

increase in the demand for a product, measured in % over set time

Question 15

why is it good for a business to know its size?

Answer 15

don’t overprice/overproduce

selling strategy

Question 16

what is market share?

Answer 16

share of total market owned by a particular business, product or brand

Question 17

What are 3 ways to increase market share?

Answer 17

• be aware of customer needs
• sell more to existing customers
• clear marketing plan

Question 18

Define market dominance

Answer 18

measure of strength of a business and its product relative to competition

Question 19

define barriers to entry

Answer 19

factors that could prevent a business from entering a market

Question 20

define barriers to exit

Answer 20

factors preventing a firm from leaving market, even if they wanted to

Question 21

Give 2 barriers to entry

Answer 21

• large start up costs
• need to break customer loyalty
• legal restrictions (patents)

Question 22

give 2 barrier to exit

Answer 22

• difficulty selling off capital

- contracts with suppliers

Question 23

define price

Answer 23

amount customers are willing to pay

Question 24

define cost

Answer 24

amount spent of producing a product

Question 25

define merger

Answer 25

where 2 companies join together to form a new larger firm

Question 26

define aquisition

Answer 26

where control of another business is achieved by buying a majority of its shares

Question 27

what does CMA stand for?

Answer 27

competition and markets authority

Question 28

What are the aims of CMA?

Answer 28

to make markets work well for customers, businesses and economy

Question 29

If the supply increases, price ...

Answer 29

... increases

Question 30

if price increases, demand ...

Answer 30

... decreases

Question 31

Define demand

Answer 31

the amount that customers are willing and able to pay for a good/service at a given price

Question 32

Define supply

Answer 32

the amount that sellers are willing and able to sell of a good/service at a given price

Question 33

Define equilibrium

Answer 33

situation where demand is equal to supply

Question 34

If a supply factors has a - impact, what happens to curve?

Answer 34

shift left

Question 35

Give 5 demand factors

Answer 35

price, income, wealth, taste&fashion, ads/campaign

Question 36

Explain the effect of income on demand

Answer 36

more disposable income = more avaliable to spend = increased demand

Question 37

Give 3 supply factors

Answer 37

price, min. wage, cost,

Question 38

Explain the effect of minimum wage on supply

Answer 38

if min, wage increases = the employees will need to be paid more = some may be made redundant = decrease in production rates = less supply

Question 39

Define a substitute.

Answer 39

an alternative product that serves the same function

Question 40

Define a complement.

Answer 40

a product that is used and therefore bought, in conjunction with another

Question 41

Give an example of a substitute and a complement

Answer 41

s: raspberries and strawberries c: printer and printing ink

Question 42

Define elasticity of demand

Answer 42

how sensitive quantity is to a change in price

Question 43

Define inelastic demand

Answer 43

quantity is insensitive to change in price (petrol)

Question 44

What is elastic demand

Answer 44

quantity is sensitive to change in price (substitutes)

Question 45

Define globalisation

Answer 45

process of growth in world markets through integration, where it is possible to trade in global markets as one would in domestic markets

Question 46

Why is it beneficial for a business to import?

Answer 46

cheaper production costs, cheaper labour, growth of technology

Question 47

What is a multinational?

Answer 47

a company based in one country but manufactures and sells in multiple other countries

Question 48

Why is it beneficial to be a multinational?

Answer 48

gain economies of scale, lack advan of lack of legal constraints in LEDC's

Question 49

Give 1 + and 1 - of multinationals.

Answer 49

- develop local skills, utilise resources | - child labour, income to domestic market

Question 50

Define emerging market.

Answer 50

developing countries that are achieving rapid growth and industrialization, and quickly gaining status of developed market

Question 51

What are examples of opportunities?

Answer 51

- new markets, op for more production,

Question 52

What are examples of threats?

Answer 52

- reduced exports as LEDC produce for themselves

Question 53

What are examples of threats?

Answer 53

- reduced exports as LEDC produce for themselves

Question 54

What is the business cycle?

Answer 54

the process that the market goes through in terms of growth and time

Question 55

What is a boom on the business cycle?

Answer 55

high levels of employment, high demand, encouraged investment

Question 56

What is a recession?

Answer 56

confidence is low, employees redundant

Question 57

What are supply side policies?

Answer 57

increasing capacity in the economy

Question 58

What are macro economic objectives?

Answer 58

- reduce unemployment - increase economic growth - control inflamation

Question 59

What is the multiplier effect?

Answer 59

change one variable, and there is a visible knock on effect

Question 60

What is meant by market dominance?

Answer 60

when a business has majority share of the market (25%)

Question 61

What is meant by merger?

Answer 61

When two businesses join and become one larger one

Question 62

What is meant by acquisition?

Answer 62

One business takes over the running of another

Question 63

what is meant by organic growth?

Answer 63

when a business naturally grows internally

Question 64

what is the influence of the EU?

Answer 64

legislation, single currency

Question 65

Give 2 political factors that might influence a business.

Answer 65

campaigns, uncertainty, legislation

Question 66

Give 2 economic factors that might influence a business.

Answer 66

exchange rates, strength of currency

Question 67

Give 2 social factors that might influence a business.

Answer 67

cost of living, disposable income

Question 68

Give 2 technological factors that might influence a business.

Answer 68

access to computers, wifi,

Question 69

What is meant by the digital revolution?

Answer 69

increase in access to places through the use of technology

Question 70

What is the purpose of legislation?

Answer 70

creating equality, good environment to work in, safe, protect data, etc.

Question 71

Give 3 different legislations.

Answer 71

data protection, equality, health and safety, working hours

Question 72

explain one legislation

Answer 72

eg. working hours - only up to 48 hrs a week | eg. equality - everyone treated equally no matter race, religion etc.