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Unit 3 Flashcards

1
Q

What’s the equation for market share

A

Total sales/market size by value or volume

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2
Q

How do u calculate market size

A

Total sales/market share x100

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3
Q

What is perfect competition

A

Many firms with similar products competing to meet wants and needs of customers

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4
Q

What is a monopoly

A

A business who has 25% or more market share

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5
Q

Who are the people that make sure firms are treating consumers fairly

A

Competition and markets authority

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6
Q

What’s oligopoly

A

Few large firms dominating

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7
Q

What’s effective demand?

A

The quantity that people in a particular market can and will purchase at a certain price.

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8
Q

What is the equilibrium price.

A

The price consumers demand coincides with what businesses are prepared to supply

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9
Q

What happens when the demand is lower than the supply

A

The price is reduced as there are unsold stocks of goods. This creates a greater demand as the price is pulled down to the equilibrium

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10
Q

What happens when the supply is lower than the demand?

A

Shops increase their prices as consumers are prepared to pay more. Demand is pushed up towards equilibrium

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11
Q

What are some determinants of demand?

A

Price
Income
Government changes
Taste and fashion

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12
Q

What are some determinants of supply

A

Price
Cost
Taxes and subsidies
External shocks

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13
Q

What moves a consumer along a demand curve

A

ONLY PRICE. All other determinants move left or right
Price stays Same but more or less is determined at every price level.

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14
Q

What are Inferior goods

A

Demand goes down for certain goods when income rises e.g budget goods

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15
Q

What are normal goods

A

Demand goes up for certain goods when income rises

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16
Q

What’s price elasticity

A

How responsive demand is to a change in price

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17
Q

What is elastic?

A

When the change in demand that results from a price change is greater than the change in price that caused it

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18
Q

What is inelastic

A

When the change in demand that results from a price change is lower than the change in price that caused it

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19
Q

What happens when a product is inelastic?

A

Able to charge more and still similar demand. Firms revenue Will rise e.g. petrol

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20
Q

What happens when a product is elastic

A

Price goes up, demand decreases
Firms revenue Will decrease

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21
Q

What makes a product inelastic

A

Few substitutes
Cost of buying the product in proportion to the consumers income is small

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22
Q

What are some negative instances where stakeholders don’t benefit from competition within a market

A

Employees- competitive pressure to keep costs down= may negatively impact wages, hours, overtime payments
Suppliers- may be offered a “take it or leave it” approach to the conditions of supply and payment.
Shareholders- little market power, little control over prices= dividends relatively low

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23
Q

What are barriers to entry

A

They factors tgat could prevent a business from entering and competing in a market
E.g large start up costs
Legal restrictions
Inability to gain eos
Price wars from other bus. In market

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24
Q

What are barriers to exit?

A

The factors that could prevent a business from leaving a market even if it would like to.
E.g.
contracts with suppliers
High redundancy costs- employees entitled if worked for 2 years+
Difficulty of selling capital

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25
What is organic growth
Achieved by increasing sales.
26
What is inorganic growth
Mergers or acquisitions
27
What are mergers?
2 companies joining together to form 1. Buying majority of 1 shares. Creates a new brand entity.
28
What are acquisitions
2 bus, merging to form 1. Buying shares. But still have sepetate entity’s.
29
What makes a product elastic
Lots of substitutes Location of shop
30
What is the price elasticity of demand
The responsiveness of demand for a product to a change in its price
31
What is the equation for price elasticity
% change in quantity demanded/ % change in price Elastic 1< Inelastic 1>
32
What’s the equation for income elasticity of demand
% change in quantity demanded/ % change in income
33
What does the EU aim to do
Aims to improve the standard of living of their citizens by Cresting large market Generating economic + political stability Achieving balanced economic growth Protecting all ur citizens
34
What does the single market mean
Makes easier to trade, creates wealth and jobs . Can trade freely with common regulations
35
What trade barriers do countries have
Quota- restrict number of imports allowed Tariffs- tax goods entering from abroad
36
What is the aim of the single market
To remove trade barriers. It has harmonisation of specifications, safety standards and testing= less cost Harmonisation of qualifications Financial restrictions abolished
37
What are the advs of the uk businesses joining the euro
Easier to compare prices Less uncertainty of costs + profits Would encourage trade- no commission for buying or selling euros.
38
What are the disadvs of uk joining the euro
Loss of control over monetary policy. Uk can’t control their interest rate anymore Wealthier countries would only make decisions that benefit them
39
What is globalisation
Growth in world markets through a process of integration where it is possible to trade in a global market
40
What can globalisation lead to?
Companies- tnc Economies of scale
41
What is trade liberalisation
Process where international trade becomes easier as there is a relaxation of rules
42
What restrictions do govs put on imports
Embargoes- total ban Quotas- fixed quantity allowed to be imported
43
What are the ADvs of globalisation
Investment jobs and training all around the world News and ideas spread quickly LICs have potential to develop
44
What are the disadvs of globalisation
Mostly for HICS Workers exploited in lics Jobs can be taken in hics
45
Opps of globalisation
Larger markets and low production costs Can take adv of tech around world
46
Threats of globalisation?
Competition
47
What are emerging markets
NEEs achieving rapid growth and industrialisation Business want to grow in emerging markets as they can become a known brand where the large pops r just starting to have discretionary income.
48
What is international trade
Exchange of capital, goods and services across the borders of diff countries
49
What are the benefits of trade
Variety of products Economic efficiency Access to mills o customers Countries can specialise in what they do best in.
50
Why are there trade barriers in some countries
Protect own industries Foreign competition can lead to unemployment
51
What are trade blocs?
Group of counties in similar area that protect themselves from imports from non members
52
What is a preferential trade bloc
Members lower but don’t eliminate barriers among themselves They have their own policies with non-members
53
What is a free trade area trade bloc
Members eliminate internal barriers All agree on common policies on external barriers
54
What is a customs union trade bloc
Eliminate internal barriers goods only Common policies with external barriers
55
What is a common market?
Eliminate internal barriers + comm pols with external. Free movement of goods and people
56
What is an economic union trade bloc
Elim in. Barriers Same pols with ex barriers Free move of goods, people and uniform set of economic policies
57
What is full integration trade bloc
Everything the same e.g USA
58
What is the WTO
World trade organisation . Try to settle trade disputes + keep peace
59
What are the benefits of trade blocs
Acc big market Tariffs removed- cheaper components Eos potential Stability bus. No longer has sales all in one area
60
What are the disadvs of trade blocs
Have to stick to rules and regs. Hinder trade with non members Competition may be too big for other bus. In the bloc
61
What is the exchange rate
The value of one currency in terms of another
62
What is a strong pound
Get more foreign currency for the pound
63
What is hot money
Money that flows from country to country in search of highest interest rate
64
How is a business affected by growth of eu
Taken adv of migrant workers Production in newer members countries
65
How are businesses affected by central gov
Depending on political persuasion of party- may make rules Depending on state of economy Cma- competition markets authority- regulate markets so there’s no dominating business
66
What is privatisation
Act of passing ownership from the public to private sectors by selling shares in the businesses E.g British rail Northumbrian water Gas companies

Business (4 decks)

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