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The economy Flashcards

(76 cards)

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1
Q

What is a planned economy?

A

An economic system where the government owns the land or natural resources and businesses and pays the workers.

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2
Q

What are the characteristics of a planned economy?

A

The government decides what goods and services people and set the prices of these goods and services

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3
Q

What is a market economy?

A

An economic system where individuals own the land or natural resources and businesses and thee owners pay their workers.

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4
Q

What is a mixed economy?

A

An economic system where both the government and individuals own land or natural resources and businesses.

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5
Q

What is free enterprise ?

A

Private business operates in competition and largely free of state control.

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6
Q

What is globalisation?

A

When countries interact and trade goods and services on a worldwide scale

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7
Q

Why is a global economy so beneficial?

A

It results in greater economic growth and a better life for all.

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8
Q

What is economic growth?

A

Steady growth in the productive capacity of the economy.

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9
Q

What is a circular flow?

A

Shows how an economy works in the real world.

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10
Q

What is the difference between a closed and open economy?

A

Closed economy excludes trade with countries and an open economy includes trade with other countries(foreign trade

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11
Q

Who are the participants in a closed economy?

A

Consumers, producers and the government.

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12
Q

Who do consumers represent and what is their role in the circular flow?

A
  • Represent households

- They buy goods and services that producers provide and they own factors of production.

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13
Q

What are the factors of production?

A

Labour, natural resources, capital and entrepreneurship.

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14
Q

Who do producers represent and what is their role in the circular flow?

A
  • Represent all businesses

- make and market the goods and services.

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15
Q

What do both households and businesses provide the government?

A

They pay the government taxes.

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16
Q

What is the governments role in the circular flow?

A

The government spends tax money to produce goods and provide essential services to the people

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17
Q

Where are the prices of goods and services that consumers buy determined?

A

In the product market.

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18
Q

What is the factor market?

A

where the prices for factors of production that businesses and government buy are determined.

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19
Q

what is the labour market?

A

When people who are looking for work and those offering work meet and negotiate salaries.

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20
Q

How does a member of household losing their job affect the circular flow?

A

No labour can be sold in return for an income

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21
Q

How does the inability of a business to pay its workers affect the circular flow?

A

The labour do not receive an income

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22
Q

Who does a business producing faulty goods affect the circular flow?

A

The goods cannot be sold and the business earns no money

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23
Q

How does drought affect the circular flow?

A

No goods are produced and the business has no income.

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24
Q

How does workers striking affect the circular flow?

A

Workers receive no income and businesses cannot produce goods.

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25
What is business activity?
The process of converting inputs into outputs by adding value.
26
What are the 3 main sectors in the economy?
Primary, secondary and tertiary sectors.
27
Give 4 examples of a primary sector?
Farming, mining, fishing and forestry.
28
What is a secondary sector?
The production of goods and services
29
Give examples of a secondary sector?
electricity, gas and the supply of water.
30
What is tertiary sector?
Businesses in this sector supply services.
31
What are examples of essential services sector provided by the tertiary sector?
``` Wholesale and retail shops Banks Insurance companies Taxis hospitals ```
32
Explain the chain of production?
The process whereby raw material is used (primary sector) to make a product and then sold to consumers (tertiary sector)
33
What does it mean if a business chooses to specialise?
The producers concentrate on making specific products, or providing a narrowly defined service.
34
Why are minerals described as dwindling assets?
Because once they are removed, they cannot be replaced.
35
What is sustainable development?
To meet the basic needs of people today without ruining the chances of future generations to do the same.
36
What are the 8 business functions?
- Finance - Purchasing - Marketing - Human resources - Administration - Production - Public relations - General & Risk management
37
What is the use of a business plan?
a plan of action that has information about how an entrepreneur aims to start a business and why the business will be successful.
38
What is the main aim of a business plan?
To convince stakeholders that the business will be a success.
39
Give examples of stakeholders?
Investors, bankers, employees and suppliers.
40
What is the importance of a business plan?
- Encourages entrepreneur to put ideas on paper - Plan od action and provides a checklist that can be used to make out the direction of the business - helps entrepreneur get finance and make decisions - Provides a basis for future planning and improvement in the businesses performance.
41
Give the acronym for the smarter goals?
``` S-Specific M-measurable A-Achievable R-Realistic T-Time bound E-Ethical R-Recordable ```
42
Short-term goals?
goals you want to achieve soon
43
Medium-term goals?
Goals that you wish to achieve soon after starting the business.
44
Long-term goals?
Goals you wish to achieve as the business develops.
45
What are the 4P's?
Product Policy Place Promotion
46
What are variable costs?
those costs which vary with the activity of the business
47
What are fixed costs?
Costs that remain the same every month regardless of changes in the volume of products or services sold.
48
Give examples of fixed and variable costs?
Variable Costs- telephone, electricity, stationery and packaging Fixed Costs- Salaries and rent paid.
49
What is Break-even point?
The point were there is no profit or loss made.
50
What is the importance of break-even point?
Once break-even point is reached, any product sold over and above this point will start earning profit for the business.
51
Give an the equation for sales
Sales=Variable Costs + Fixed Costs
52
How do you calculate gross profit?
Sales minus Cost of sales.
53
What skills are required to work in the primary sector a?
Physical skills, farm workers, fisherman, miners.
54
What skills are required for the secondary sector and who?
Physical and managerial skills- factory workers, builders, manufacturers and managers.
55
What skills are required for the tertiary sector and who ?
Mental, organisational and managerial skills- retailers, entrepreneurs, educators, nurses, lawyers, doctors and pilots.
56
What is demand?
The relationship between quantity and price and is the different quantities of a good or service that consumers are willing to buy at various possible prices during a specific period.
57
what does the law of demand state?
The demand and the price of a good or service are inversely related, so high price-low demand, high demand-low price
58
The higher the price...?
the lower the quantity demanded
59
What is supply?
The quantity of goods or services that producers are willing to supply at various pries during a specific period.
60
So what is the supply curve?
A line that descries the quantity that suppliers are willing to supply at each price
61
What is the supply relationship?
the relationship between price and how much of a good or service is supplied to the market?
62
What does the law of supply state?
the higher the price of a good, the more suppliers are willing to supply.
63
What does the supply curve tell us about the relationship between price and quantity supplied.
That the higher the price the higher the quantity supplied because
64
Why are suppliers more willing to sell at higher prices?
Because selling a higher quantity at higher prices increases income?
65
What is the equilibrium?
When the demand and supply are matched or equal.
66
How is an equilibrium illustrated in a graph?
Where the supply curve intersect the demand curve
67
How does equilibrium point affect suppliers and consumers?
At the equilibrium point, suppliers are selling all the goods and services they have produced and consumers are getting all the goods and services that they are demanding.
68
What does a movement along the demand curve show us?
A change in both price and quantity demanded from one point to another.
69
When does a movement along the demand curve occur?
When the price of the good or service changes and the quantity demanded changes according to the original demand relationship.
70
Describe the term ''change in quantity demanded''?
A movement that occurs when a change in the quantity demanded is caused only by a change in price.
71
When does a movement along the supply curve occur?
When the price of the good changes and the quantity supplied changes without moving the supply curve.
72
Describe the term ''change in quantity supplied''
A movement that occurs when a change in quantity supplied is caused only by a change in price.
73
What causes the demand for a good or service to change even though the price stays the same?
When the quantity demanded is affected by other factors and not the price.
74
What does a shift in the demand curve imply?
That the original demand relationship has changed.
75
When does a change in supply occur?
Whenever factors that affects the supply of the good, other than its price, change.
76
What is sustainable development?
To meet the basic needs of people without ruining the chances of future generations to do the same.

EMS-Business (2 decks)

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