Unit 5.1
- Created by: 2002_ames
- Created on: 05-04-18 14:20
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- Unit 5.1
- Trade-offs
- When the selection of one choice results in the loss of the benefits gained by another
- Opportunity cost
- Benefit lostfrom the next best alternative when making a choice
- eg. spending time grandparents. opportunity cost= spending time with friends
- eg. spending money on healthcare. opportunity cost= spending on education
- Scarcity and choice
- Limited amount of resources so choices have to be made.
- Raising and lowering prices
- Price is the amount of money customers need to pay to buy a product
- Changing price can lead to change in demand
- Revenue is the amount of money a business gets from selling its products
- Price sensitivity
- When changing the price of a product leads to more than proportional change in demand.
- Lots of substitutes
- Luxury item/ not a neccessity
- Price insenstitivity
- When changing the price of a product leads to less than proportional change in demand
- Few / no substitutes/ very strong branding
- Product is essential/ a neccessity
- Price is the amount of money customers need to pay to buy a product
- Stakeholders
- Examples and their key interests
- Stakeholder conflicts
- Different stakeholders have different viewpoints about the same issue
- Example 1
- Example 2
- Hidden costs and benefits
- Third parties are people or groups that have nothing to do with the decision
- Negative Externalities
- Negative effect of an economic decision on a third party
- Traffic congestion
- Noise pollution
- Air pollution
- Water pollution
- Overcrowding
- Resource depletion
- Positive Externalities
- Positive effect of an economic decision on a third party
- Job creation
- Site development
- Training and education
- New technology
- Research and development
- Trade-offs
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