Unit 1 Basic economics Flashcards
(16 cards)
<p>What is the definition of opportunity cost</p>
<p>The value or cost of a product you miss out on when you choose another item. It is the next best thing and as money is a scarce resource you could not afford both. </p>
<p>What is the difference between value and satisfaction </p>
<p>Value is the worth of something represented by the amount of money someone is willing to pay for it.
Satisfaction is the enjoyment received by consuming or receiving a product and is NOT always constant.</p>
<p>What is the definition of price sensitivity </p>
<p>How much the demand changed for a product as a result of a price change. It may depend on the availability of different substitutes.</p>
<p>What is the definition of a stakeholder</p>
<p>A person who is affected by a business's decisions. They can be affected financially, emotionally and socially.
Shareholders ARE stakeholders but stakeholders are NOT ALWAYS shareholders.</p>
<p>What is the definition of a negative externality</p>
<p>And negative externality is when a business or individual inflicts a COST on other stakeholders and DOESN'T compensate them for it.</p>
<p>What is the definition of a competitive advantage </p>
<p>Any factor that helps a business succeed when competing with rivals.</p>
<p>What are the four ways of gaining a competitive advantage </p>
<p>Conducting market research
Having creativity.
Cutting and controlling costs
Having good leadership.</p>
<p>Why do businesses lose competitive advantages</p>
<p>They lose touch with customer needs
They have a loss of productivity
They may be faced with increased competition
The market condition are changing </p>
<p>What is the difference between cash and profit</p>
<p>CASH is the money within a business within a sIngle point in time that the business has access to.
PROFIT is the money within a business over a period of time.</p>
<p>What is the definition of cashflow</p>
<p>The flow/ movement of cash within a business. It includes what goes in and out.</p>
<p>What causes cashflow problems</p>
<p>Increased competition, varying demand, late payments from customers, fixed costs and an increase of suppliers prices.</p>
<p>With bad cashflow businesses can't....</p>
<p>Advertise, buy stock, pay loans, pay employees, expand, afford to pay bills or pay suppliers.</p>
<p>What are the main ways that the success of a business can be measured </p>
<p>Survival- how long it has been trading
Revenue- the total amount of sales in a period of time
Profit-revenue - costs
Market share- the amount of revenue as a percentage of the whole market
Corporate Social responsibility- what the business does for the environment or charitable organizations.
</p>
What is the definition of resources
Things that are needed to satisfy wants
What is the definition of scarce resources
A situation where there aren’t enough resources for everyone to get what they want all of the time.
What sort of wants to we have
We have unlimited wants but limited scarce resources. As a result we make choices that have effects on people , communities and countries.
