Business

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What is a competitive market?
When a large number of producers compete to meet the needs of a large number of consumers
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What is the economic problem?
When there are finite resources for an infinite amount of needs
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What is economic activity?
To satisfy the wants and needs of society
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What is opportunity cost?
The benefit lost of the next best alternative when making a choice
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What is a trade-off?
All of the alternatives that have been given up
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What is a business objective?
Targets or goals to be achieved within a time frame
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What is SMART?
Specific Measurable Achievable Realistic and Timed
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What is a stakeholder?
Anyone who has an interest in the actions of the business (customers, employees etc)
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What is an economic agent?
Anyone that partakes in economic activity (firms, governments etc)
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What is an entrepreneur?
A person who spots an opportunity and shows initiative, willing to take risks to see the rewards
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Four factors of production?
Land, Labour, Capital, Entrepreneurial skill
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What is added value?
Value of the output is higher than the sum of the value of all the inputs
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What is specialisation?
When economic units such as firms concentrate on one specific good or service
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What is the division of labour?
When workers are assigned specific tasks in a workplace
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What is an interest rate?
The cost of borrowing (the cost of money)
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What is an exchange rate?
The value of one currency for the conversion to another
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What is taxation?
Process of imposing charges on businesses and individuals by the government
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What is unemployment?
Number of people looking for work but who cannot find a job at a point in time
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What is inflation?
A general rise in prices or a fall in the value of money
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What is the demand curve?
Relationship between price and quantity demanded
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What can cause a shift in the demand curve?
Consumer tastes/fashion, size/age of population, changes in income
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What are the determinants of supply in the market?
The price of the good, government policy(taxes), prices of other goods
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What can cause a shift in the supply curve?
If the cost of production of a product increases then it will be more expensive to supply the product (resulting in reducing the output)
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What are external shocks?
Unexpected events that are outside of the businesses control but have a direct impact on level of supply
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What is the market equilibrium?
The point at which demand is equal to supply
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What are economic incentives?
The reasons for economic agents to provide goods and services
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What is allocative efficiency?
Customer satisfaction is maximised in the production of goods and services
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What is a mass market?
A market that targets all consumers (not segmented)
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What is a niche market?
Identifies small gaps in the market
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What is market research?
Collection and analysis of data and information to inform a business about it's market
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What is market segmentation?
When the market is split into subgroups of consumers with similar characteristics
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What is demographic segmentation?
Age, gender, race, religion etc
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What is geographic segmentation?
People in different areas have different tastes
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What is income segmentation?
Making subgroups based on the level of income
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What is behavioural segmentation?
Subgroups based on behavioural patterns rather than characteristics
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What is market mapping?
Finding a gap in the market for a product (low pice low quality, high price high quality)
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What is competitive advantage?
Allows a business to perform more successfully than others in the market
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What is added value?
The value of a finished good or service over and above the cost of achieving it
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What is a stable market?
No major fluctuations in supply or demand
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What is a dynamic market?
One that is constantly changing
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What is credit?
The creation of money by banks that can be used to buy goods and service
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What is limited liability?
Lose less
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What is unlimited liability?
Lose more
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What is a negative externality?
Cost suffered by the third party due to an economic transaction
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What is a positive externality?
Benefits enjoyed by the third party due to an economic transaction
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what is regulation?
government creating competitive markets (satisfactory services)
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what is indirect taxation?
a charge imposed on products and goods
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what are grants and subsidies?
leads to a decrease in the cost of supply for a firm
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what is government failure?
when the government try to intervene, however it misallocates resources
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what is sales volume?
the amount of sales expressed as a number of units sold
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what is sales revenue?
the amount of sales expressed as the total sum of money spent by the consumers
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what is revenue?
money coming in from the sale of goods or services
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what are fixed costs?
stay the same regardless of the output e.g. rent
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what are variable costs?
change in relation to the number of items produced e.g. raw materials
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what are total costs?
fixed costs plus total variable costs
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what is average cost?
the average cost of producing a unit of output
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what is break-even?
a point at which a business is not making a profit or a loss
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what is contribution?
when a business sells a product the money is contributed towards its own variable costs and then the fixed costs
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what is the margin of safety?
how much actual output is above the break-even level of output
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what is profit?
the surplus of revenue over costs, the reward for enterprise
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what is gross profit?
a measure of the firms profitability, due to the relationship between gross profit and sales revenue
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what is operating profit?
measure of the firms profitability, due to the relationship between net profit and sales revenue
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what is net profit?
measure of the firms profitability, due to the relationship between net profit and sales revenue
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how can a business increase profitability?
sell the same quantity but at a higher price, sell more at the current price
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what is internal growth (organic)?
opening new branches, new product development (takes longer)
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what is external growth (inorganic)?
merging and taking over (sudden change)
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what is innovation?
the development of an idea into a new product or process
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what is a patent?
prevents people from stealing the idea (like copyright)
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what is product innovation?
changing a product that already exists
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what is process innovation?
changing a process of production that already exists
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what is the product life cycle?
Development - introduction - growth - maturity - decline - extension strategies
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give an example of a digital economy?
netflix, ebay, facebook, snapchat
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what is micro-marketing?
advertising within a niche market to a small group of consumers
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what is a unique selling point?
creating a feature within a brand that makes it stand out
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what is price elasticity of demand?
measure of how responsive demand is to a change in price
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what is cost plus?
when a percentage mark up is added to the cost of producing a good or service to calculate the selling price
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what is price skimming?
setting a high price for a new product in order to recoup costs
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what is penetration pricing?
setting a low initial price for a new product in order to get a foothold in the market and gain market share
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what is predatory pricing?
prices are set low for a short period of time to force competitors out of the market
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what is psychological pricing?
making the customer think that the product is cheaper than it is
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what is non-price competition?
quality of products
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what is differentiation?
difference between products
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what are sales promotions?
facebook, cookies
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what is direct marketing?
directly to the customer
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what is full capacity?
the amount a company can produce using the current equipment they have
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what is capacity utilisation?
a measure of the potential output being achieved
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what is product efficiency?
where no additional output can be produced from the factor inputs available at the lowest possible average or unit cost
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what is time based management?
the effective management of resources to ensure that unproductive time is eliminated from the production process
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what is globilisation?
the process of greater integration and interconnectedness between countries
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what effects growth in the economy?
literacy, illness and injury, and skills and quality of the workforce
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what is specialisation?
being skilled at one thing
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what is absolute advantage?
when a country can produce a good or service with fewer resources
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what is comparative advantage?
when a country can produce a good or service at a lower opportunity cost
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what are trading blocks?
when the governments of a group of countries agree to trade together freely (normally with no barriers e.g. EU)
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what is short run?
the actual annual percentage change in real national output
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what is long run?
an increase in the potential productive capacity of the economy
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what is aggregate demand?
supply within a company
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what is a "boom"?
period of high levels of economic activity
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what is a recession?
when economic growth starts to fall in a downturn
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what is a "slump"?
period of serious economic decline in the cycle
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what is a recovery?
when economic growth starts to rise again
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what is inflation?
the rate of change in the average price level over time
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what are the three primary causes of inflation?
demand-pull, cost-push, growth of the money supply
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What is deflaion?
occurs during periods of very low or stagnant growth
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What is disinflation?
occurs when the inflation rate is positive but falling
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What is the impact of inflation on firms?
the price of goods and services tends to rise
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What is full employment?
when all factors of production are fully utilised
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What is unemployment?
when people are looking for work but cannot find a jobs
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What are the causes of unemployment?
structural, technological, and cyclical
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what are government objectives?
economic growth, unemployment, inflation, balance of payments
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what is fiscal policy?
tax and government spending
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what does it mean when the economy is epansionary?
economy is expanding (high aggregate demand)
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what does it mean when the economy is contractionary?
economy is getting smaller (low aggregate demand)
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Other cards in this set

Card 2

Front

When there are finite resources for an infinite amount of needs

Back

What is the economic problem?

Card 3

Front

To satisfy the wants and needs of society

Back

Preview of the back of card 3

Card 4

Front

The benefit lost of the next best alternative when making a choice

Back

Preview of the back of card 4

Card 5

Front

All of the alternatives that have been given up

Back

Preview of the back of card 5
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