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Flashcards in What is economics ? Deck (22)
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1
Q

What are the two types of economics ?

A

Macro economics and micro economics

2
Q

What is macroeconomics ?

A

This describes what goes on within the external environment surrounding an organisation

3
Q

What is mircoeconomics?

A

This is the environment within an organisation

4
Q

Why is economics useful for managers `/

A
  1. it examines how resources are used and what products are made
  2. it analyses how changes affect costs and demand for goods
  3. it allows for successful strategies to be built
5
Q

Types of economics ? (N+P)

A

Normative and positive

6
Q

What is normative economics ?

A

These are issues that are a matter of opinion

7
Q

What is positive economics ?

A

These are issues that are factually based

8
Q

What does consumer sovreignty mean ?

A

This is when individual consumers have ultimate power over what markets produce

9
Q

What are the types of state intervention ?§

A
  1. The government directly produces goods and services

2. The government regulates the market

10
Q

What is an opportunity cost ?

A

This is the best alternative use of a resource

11
Q

What is the difference between a good and a service ?

A

A good is a tangible product while a service is an intangible product

12
Q

What is a free market ?

A

A free market is a market that the government has little / no control over

13
Q

What is a recession ?

A

A decline in real GDP that occurs for at least 2 consectutive quarters of a year

14
Q

What does utility mean ?

A

The satisfaction from the consumption of a good

15
Q

What is marginal utility ?

A

The extra satisfaction from the consumption of an extra good

16
Q

The equation for income elasticity of demand?

A

YED = proportionate change in quantity demanded divided by the proportionate change in income

17
Q

What is an inferior good ?

A

A good which the demand decreases for when income increases

18
Q

What does APR stand for ?

A

Annual percentage rate of interest

19
Q

What is a moral hazard ?

A

E.g. buying insurance and therefore, not being as careful with goods as you would without insurance

20
Q

What does aggressive price setting do ?

A

it grows revenue

21
Q

What is aggressive price setting ?

A

This is when prices are set to push out competitors

22
Q

What is the degree of power of price setting determined by?

A

The competition