Economics Basics: Needs vs. Wants
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Questions and Answers

Which of the following is considered a 'need' rather than a 'want'?

  • A luxury car
  • A new video game
  • Designer clothing
  • A meal (correct)

    • All businesses exist primarily to make a profit.

    False (B)

    What is the formula for calculating profit?

    Profit = Revenue - Expenses

    Income that remains after taxes and mandatory charges is called ______ income.

    <p>disposable</p> Signup and view all the answers

    Match the following terms with their definitions:

    <p>Needs = Things essential for survival Wants = Things people desire but can live without Disposable Income = Income after taxes and mandatory charges Demand = Amount of money consumers are willing to spend on products and services</p> Signup and view all the answers

    According to the law of demand, what happens to demand when the price of a product decreases?

    <p>Demand increases (C)</p> Signup and view all the answers

    Price sensitivity refers to how much demand for a product or service is affected by changes in price.

    <p>True (A)</p> Signup and view all the answers

    Name one pricing factor that affects demand.

    <p>Price Positioning, Price Sensitivity, or Price of Related/Substitue goods</p> Signup and view all the answers

    Which of the following best describes a B2C business model?

    <p>A business that sells products directly to consumers. (C)</p> Signup and view all the answers

    Ethics are the legal principles guiding what is right and wrong.

    <p>False (B)</p> Signup and view all the answers

    What is the term for offering money or property for special treatment?

    <p>bribery</p> Signup and view all the answers

    The practice of intentionally deceiving another party for personal gain is known as ______.

    <p>fraud</p> Signup and view all the answers

    Match the following business activities with their descriptions:

    <p>Wholesaler = Buys products from other businesses and sells to retailers. Importer = Finds products in foreign countries to sell. Retailer = Sells products directly to the end consumer Manufacturer = Creates new products</p> Signup and view all the answers

    Which of the following is NOT typically considered a principle of Corporate Social Responsibility?

    <p>Focusing solely on maximizing profits (C)</p> Signup and view all the answers

    The CSR movement was started by government legislation forcing companies to be socially responsible.

    <p>False (B)</p> Signup and view all the answers

    What is a stakeholder?

    <p>A person or group of people that can be affected by the business or affect the business.</p> Signup and view all the answers

    A business that uses dishonest sales tactics, like offering a cheap product only to pressure a customer into buying a more expensive one, is using a ______ technique.

    <p>bait and switch</p> Signup and view all the answers

    Which of these options would NOT be considered a way that a company would handle an employee being unethical?

    <p>Give the employee a promotion (B)</p> Signup and view all the answers

    Which of the following is a non-pricing factor that affects demand?

    <p>New Technology (A)</p> Signup and view all the answers

    Disposable personal income is the income remaining after all taxes and mandatory deductions have been taken from your paycheque.

    <p>True (A)</p> Signup and view all the answers

    What is the law of supply?

    <p>The law of supply states that as the price goes up, the supply goes up and as the price goes down supply goes down.</p> Signup and view all the answers

    The point at which total cost and total revenue are equal is called the ______ point.

    <p>break even</p> Signup and view all the answers

    Match the following business terms with their definitions:

    <p>Primary Industries = Find or create products from natural resources and sell them Secondary Industries = Convert raw materials into usable products Tertiary Industries = Provide services such as accounting and logistics B2B = Transactions between businesses</p> Signup and view all the answers

    Which of the following best describes a 'loss leader'?

    <p>A product sold at a low price to attract customers. (C)</p> Signup and view all the answers

    All businesses exist to make a profit.

    <p>False (B)</p> Signup and view all the answers

    How do non-profit organizations typically exist without making a profit?

    <p>They use donations and/or money from the government.</p> Signup and view all the answers

    In economics, market forces influence the price and quantity of goods and services, driving ______ and demand in a market.

    <p>supply</p> Signup and view all the answers

    Match the following forms of business ownership with their descriptions:

    <p>Sole Proprietorship = Owned by one person Partnership = Owned and shared with one or more partners Corporation = Acts as a separate legal entity Co-operative = Owned and managed by its members</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a sole proprietorship?

    <p>Limited liability (B)</p> Signup and view all the answers

    In a co-operative, each member has multiple votes based on their investment.

    <p>False (B)</p> Signup and view all the answers

    What are two advantages of a partnership?

    <p>More hands on deck and shared responsibilities.</p> Signup and view all the answers

    The state in which market supply and demand balance each other, resulting in stable prices, is known as the ______ point.

    <p>equilibrium</p> Signup and view all the answers

    Match the following industries with their descriptions:

    <p>Primary Industry = Examples include fishing and mining Secondary /Processing Industry = Examples include manufacturing steel from iron Tertiary Industry = Examples include accounting and legal services Business Services = Examples include consulting and logistics</p> Signup and view all the answers

    Flashcards

    Demand

    The amount of money consumers are willing to spend on products and services at a given price.

    Law of Demand

    As the price of a product or service goes down, the demand for the product goes up and vice versa.

    Disposable Income

    Income that remains after taxes and mandatory charges.

    Profit

    The revenue generated by a business minus its expenses.

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    Price Sensitivity

    When demand for a product is greatly affected by a price increase or decrease.

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    Price Positioning

    The way a business positions its product or service in the market, whether high-end or discount.

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    Substitute Goods

    Products that can be replaced by another.

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    Related Goods

    Indirect competition where goods and services compete for consumer spending.

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    B2B

    A business sells products or services directly to other businesses.

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    B2C

    A business sells products or services directly to consumers.

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    Wholesale

    A business that buys products in bulk from other businesses, usually manufacturers or importers, and then sells them to retailers.

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    Retailer

    A business that buys products from wholesalers and sells them to consumers.

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    Importer

    A business that searches for products in foreign countries to import and sell in Canada.

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    Ethics

    Moral principles that guide what is right and wrong.

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    Ethical behavior

    Acting in a way that is honest, fair, and respects others.

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    Bait and switch

    A business practice where a company advertises a product at a low price to attract customers, but then tries to sell them a more expensive product.

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    Fraud

    Intentionally deceiving another party for personal or financial gain.

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    Corporate Social Responsibility (CSR)

    Principles and practices a company institutes to benefit its community.

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    Disposable Personal Income

    The money you have left after paying taxes and other mandatory deductions.

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    Non-Pricing Factors of Demand

    Factors that influence demand other than price. Examples include income, technology, and trends.

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    Supply

    The amount of goods or services a business is willing and able to produce at a given price.

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    Equilibrium Point

    The point where supply and demand are equal, resulting in a stable price.

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    Loss Leader

    A business that sells a product at a loss to attract customers to other products.

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    Capacity

    The ability of a business to produce a certain quantity of goods or services.

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    Break-Even Point

    The point where a business's total revenue equals its total costs.

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    Not-for-profit Business

    A business that operates without the primary goal of making a profit.

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    Industries

    The different sectors of the economy, such as primary, secondary, and tertiary.

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    Corporation

    A legal entity separate from its owner, with its own liability and ownership structure.

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    Sole Proprietorship

    A business owned and managed by one person.

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    Partnership

    A business owned by two or more people who share responsibilities and profits.

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    Study Notes

    Needs vs. Wants

    • Needs are essential for survival (water, shelter, food).
    • Wants are desires, not essential for survival.

    Profit Equation

    • Profit = Revenue - Expenses
    • Example: Profit from kilt pin sales is $1.06 ($3 - $1.94).

    Reasons for Business Existence

    • Businesses provide goods and services.
    • Businesses aim to make a profit.
    • Some businesses are non-profit.

    Demand

    • Demand is consumer willingness to spend on goods/services.
    • Law of Demand: As price decreases, demand increases (and vice versa).
    • Factors affecting demand are:

      • Price Positioning (luxury vs. discount)

      • Price Sensitivity (how much demand changes with price)

      • Price of Related/Substitute Goods (availability of alternatives)

      • Personal/Household Income (availability)

        • Disposable Income: Income after taxes and mandatory charges
        • Discretionary Buying Power: Money left after necessities

      • New Technology (affect on existing products/services)

      • Advertising/Promotion (campaigns, announcements)

      • Fads/Trends

    Supply

    • Supply is the amount of goods/services a business is willing to offer at certain prices.

    • Law of Supply: As price increases, supply increases (and vice versa).

    • Factors affecting supply are:

      • Pricing: Improved processes, loss leaders, bundle pricing
      • Non-pricing: Capacity, shortages of essential supplies

    • Equilibrium: Supply and demand balance, resulting in stable prices.

    • Break-Even Point: Total costs equal total revenue.

    Catholic Social Teachings

    • (No specific teachings are given in this section to summarize).

    Profit vs. Non-Profit Businesses

    • Profit businesses aim to make a profit.
    • Non-profit businesses rely on donations/government funds.
    • Both may pay employees.

    Market Forces

    • Market forces are factors influencing goods/service prices and quantities.
    • Factors include competition, consumer preferences, technology, economic growth, and government regulations.

    Business Ownership Forms

    • Corporation: A separate legal entity, providing owner protection
      • Advantages: Limited liability, increased borrowing potential.
      • Disadvantages: Complicated to set up, more regulated.
    • Sole Proprietorship: Owner is the business.
      • Advantages: Complete control, simple management.
      • Disadvantages: Unlimited liability, limited access to funding.
    • Partnership: Two or more owners.
      • Advantages: More skills and resources.
      • Disadvantages: Shared responsibility and disagreements possible.
    • Franchise: A joint venture; a franchisor licenses a business to a franchisee.
      • Advantages: Brand recognition, support structure.
      • Disadvantages: Required fees, adherence to strict guidelines.
    • Co-operative: Member-owned and managed.
      • Advantages: Equal voting rights for members.
      • Disadvantages: Potential for internal conflicts.
    • Subcategories of Business Ownership:
      • Crown corporations: Government-owned
      • Public corporations: Shares trading on stock exchanges
      • Private corporations: Private shareholders only

    What Businesses Do

    • Primary Industries: Extract raw materials (fish, meat, oil).
    • Secondary/Processing Industries: Convert raw materials into products (steel from iron ore).
    • Tertiary/Service Industries: Provide services (accounting, logistics, etc.).
    • B2B: Business-to-business transactions.
    • B2C: Business-to-consumer transactions.
    • Wholesale: Buying from other businesses and selling to retailers.
    • Importers: Bring products from other countries.
    • Retailers: Sell directly to consumers.

    Business Ethics

    • Ethics: Moral principles guiding right and wrong actions.
    • Ethical Behavior: Honest, fair, and respectful actions.
    • Unethical practices: bait-and-switch, misleading advertising, defective products, pressure sales, exploitation.
    • Bribery, theft, and fraud are examples of unethical actions.
    • Consequences for unethical behavior may vary from reprimands to prosecution.

    Corporate Social Responsibility (CSR)

    • CSR: Principles and policies to enhance community well-being.
    • Stakeholders: Individuals or groups affected by or impacting a business (e.g., employees, customers, community).
    • Reasons for the CSR movement: Social responsibility within the community.

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    Description

    Explore the fundamental concepts of needs and wants in economics, including the profit equation and the reasons for business existence. Understand how demand impacts consumer behavior and the various factors that influence it. This quiz is essential for anyone studying economics or business principles.

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