Theme 1- Basic Economic problem 0.0 / 5 ? EconomicsThe Basic Economic problemA2/A-levelEdexcel Created by: hkassem1Created on: 02-10-19 15:07 What is the Basic Economic problem? pg.1 The Basic Economic problem is scarcity. 1 of 22 What is scarcity? pg.1 Scarcity is us having unlimited wants but limited or finite resources. 2 of 22 Why are resources limited? pg.1 Resources are limited in the physical amount available and they have limited use. 3 of 22 What does scarcity lead to? pg.1 It leads to us making choices between competing wants and decide how we use our scarce resources. 4 of 22 What is opportunity cost? pg.2 Opportunity cost is making one choice and forgoing another choice. 5 of 22 Why does opportunity happen? pg.2 It happens due to there being scarce resources e.g time or money 6 of 22 What is a business objective? pg.3 A business objective is a goal set by the business to achieve in a certain time. 7 of 22 What are the 3 main business objectives? pg.3 -profit maximisation -sales maximisation -satisficing 8 of 22 What is profit maximisation? pg.3 When a firm determines the price and output level that returns the greatest profit. 9 of 22 What is sales maximisation? pg.3 When a firm sells as much product as possible without making a loss. 10 of 22 What is satisficing? pg.3 When a firm does not seek maximum profits or sales but achieves a 'good enough' level of profit that ensures survival. 11 of 22 What is survival? pg.3 To try to stay in the market with minimum profit and sales. 12 of 22 What is market share? pg.3 It is to expand and gain a certain share of the market in order to increase market power. 13 of 22 What is cost efficiency? pg.3 When a firm is making a loss then the firm tries to reduce the costs that they spend. 14 of 22 What is return on investment? pg.3 How well the business can use its assets to generate profit? 15 of 22 What is employee welfare? pg.3 Involves making sure that pay is adequate and working conditions are good. 16 of 22 What is customer satisfaction? pg.3 A source of competitive advantage so that customers are more satisfied by your product. 17 of 22 What is social objectives? pg.3 When the business aims to create benefits for society by pursuing social, environmental or ethical goals. 18 of 22 What is a trade off? pg.2 A situation where having more of one thing leads to having less of another. 19 of 22 When do consumers face trade offs? pg.2 When they don't have enough money to get 2 things so they buy more of one thing and less of another. 20 of 22 When do businesses face trade offs? pg.2 They may face a trade off between money spent on developing new products and money spent promoting existing ones. 21 of 22 When are Governments confronted with trade offs? pg.2 Whenever they consider costly policies. e.g spending more on road building may mean spending less on health care. 22 of 22
Comments
No comments have yet been made