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Questions and Answers
What is defined as a necessity for survival?
Which of the following best describes a 'want'?
Why is it essential for businesses to understand consumer needs and wants?
Which of the following terms is most likely related to the concept of 'competition' in business?
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In Maslow's Hierarchy of Needs, which level would basic safety and security fit into?
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Which of the following options describes scarcity?
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Opportunity cost only considers the gains from a chosen option.
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Define the term 'efficiency' in economic terms.
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Scarcity leads to the economic concept of __________, which refers to the loss of potential gain from other alternatives when one alternative is chosen.
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What is the primary economic goal related to resource use?
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Match the following examples with their corresponding concepts:
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To make effective decisions in economics, one should ignore the potential losses involved.
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Which of the following is NOT one of the three fundamental questions in economics?
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Define scarcity in the context of economics.
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Explain the difference between effective and efficient resource use.
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What is marginal utility?
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How does opportunity cost factor into decision-making?
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Provide an example of opportunity cost from daily life.
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Identify the three fundamental questions in economics.
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What role does scarcity play in influencing economic choices?
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Describe the concept of efficient use of resources.
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Study Notes
Profit vs. Non-profit vs Not for Profit
- For-profit businesses aim to make a profit, non-profit organizations primarily focus on serving a specific cause without a direct focus on profit, and not-for-profit entities operate to achieve a specific goal without distributing profits to owners or members.
- Most businesses in Canada are small.
Goods vs. Services
- Goods are tangible products, like cars or clothes.
- Services are intangible activities, like haircuts or financial advice.
Producer vs. Consumer
- Producers create goods or services.
- Consumers purchase goods or services.
Marketplace
- The marketplace refers to the environment where buyers and sellers interact.
Competition
- Competition occurs when businesses offering similar goods or services fight for customers.
Obsolete
- Obsolescence refers to a product or service no longer being desired or useful due to new technology, changes in trends, or reduced functionality.
Needs vs Wants
- Businesses provide goods and services to satisfy consumer needs and wants.
- Needs are necessities for survival, like food, water, and shelter.
- Wants are comforts and pleasures that add to our lives, like entertainment, fashion, and travel.
- Businesses need to listen to consumers to understand their needs and wants.
Maslow's Hierarchy of Needs
- Describes human motivation and growth.
- It's a pyramid framework that categorizes human needs.
14 year old who bought a house
- The business opportunity for the young entrepreneur was driven by the need for affordable housing and the want for a comfortable and desirable home.
- She identified a need for affordable home upgrades and home improvement services, creating a new business opportunity.
- Competitors include established real estate agents, home builders, and home improvement contractors.
Scarcity and Choice
- Scarcity refers to the idea that our wants and needs are unlimited, but our resources are limited.
- Because of scarcity, individuals and societies must make choices.
Effective vs. Efficient
- Effective means achieving the desired result, regardless of the resources used.
- Efficient means using the minimum amount of resources to achieve the desired result.
- Economics aims to achieve both effectiveness and efficiency when dealing with resources.
Marginal Analysis and Opportunity Cost
- Marginal analysis is the process of making economic decisions by considering the additional benefits and costs of taking an action.
- Opportunity cost is the value of the best alternative forgone when a choice is made.
- Opportunity cost represents the lost potential of what could have been achieved by choosing a different option.
- When making decisions, consider both the gains and the losses associated with each option.
Example of Opportunity Cost
- Imagine you have $2000 to spend and have to choose between three options: a vacation in Cuba, a home theater system, or financing a summer working in Africa.
- The opportunity cost of choosing one option is the value of the other two options you have to forgo.
- This includes not only the financial cost but also the potential experiences and benefits you would have received from the other options.
Scarcity and Choice
- Scarcity is the concept of infinite needs and wants, with finite resources
- Because of scarcity, people have to make choices. This is called Marginal Analysis or Opportunity Cost.
- Marginal Analysis focuses on the costs and benefits of each choice.
- Opportunity cost is the value of the next best alternative (what you are giving up) when making a choice.
- The key concept is not just what you gain, but what you lose.
Effective vs Efficient
- Effectiveness means achieving your desired result.
- Efficiency means using the minimum amount of resources to achieve that result.
- Economics is concerned with both effectiveness and efficiency, using resources effectively and efficiently.
Example of Opportunity Cost
- You have $2000 and three options: a 2-week vacation in Cuba, a DVD player and home theatre system, or finance a summer working in Africa.
- Regardless of the option you choose, you will be missing out on the other two.
- The opportunity cost of the vacation is not only the value of the other options but also the potential income you could be earning during that time.
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Description
Test your knowledge on key business concepts such as profit types, goods vs. services, and market dynamics. This quiz covers essential terminology that every aspiring entrepreneur should know, including competition and obsolescence. Perfect for students learning about business fundamentals.
