Economics Chapter: Supply and Market Equilibrium
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Economics Chapter: Supply and Market Equilibrium

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Questions and Answers

Which factor does NOT affect supply?

  • Technology
  • Number of producers
  • Consumer preferences (correct)
  • Cost of production

    • The law of supply states that as the price of a product decreases, the quantity supplied increases.

    False

    What is market equilibrium?

    The point where quantity demanded equals quantity supplied.

    The ______ sector processes raw materials into finished goods.

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

    Match the following sectors with their primary activity:

    <p>Primary Sector = Extracts raw materials from nature Secondary Sector = Processes raw materials into finished goods Tertiary Sector = Provides services to consumers and businesses</p> Signup and view all the answers

    Who makes all decisions in a planned economy?

    <p>The government</p> Signup and view all the answers

    In a mixed economy, all production factors are owned by the government.

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

    Name one example of a planned economy.

    <p>North Korea</p> Signup and view all the answers

    In a planned economy, the main goal is to improve the welfare of all __________.

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

    Which of the following is a disadvantage of planned economies?

    <p>Lack of economic freedom</p> Signup and view all the answers

    Match the following features with their corresponding economy types:

    <p>Market Economy = Prices determined by competition Planned Economy = All citizens receive equal education Mixed Economy = Combination of private and government control</p> Signup and view all the answers

    What is one characteristic of a planned economy?

    <p>The government owns all land and resources.</p> Signup and view all the answers

    Businesses in a market economy are controlled by __________.

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

    What is the primary role of the administration function in a business?

    <p>Recording and organizing important information</p> Signup and view all the answers

    The public relations function only focuses on external customer satisfaction.

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

    Name one characteristic of the risk management function.

    <p>Identification of risk</p> Signup and view all the answers

    The administration function is essential for the __________ operation of a business.

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

    Which of the following is NOT a characteristic of the public relations function?

    <p>Evaluating financial performance</p> Signup and view all the answers

    Match the following roles with their responsibilities:

    <p>Secretary = Handling daily correspondence Administration Assistant = Supporting office operations Personal Assistant = Assisting executives Administrator = Overseeing administrative systems</p> Signup and view all the answers

    Risk management functions only involve evaluating financial investments.

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

    What is one way a business can show social responsibility?

    <p>Participating in community projects</p> Signup and view all the answers

    Which trade union represents workers in the mining industry?

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

    COSATU is a federation that represents only teachers in South Africa.

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

    What is the primary focus of trade unions in South Africa?

    <p>Facilitating peaceful negotiations between workers and employers.</p> Signup and view all the answers

    _________ represents workers in local government.

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

    Match the following trade unions with their primary representation:

    <p>COSATU = General federation representing various workers FEDUSA = Federation of Unions representing workers in different industries NAPTOSA = Represents professional teachers SADTU = Represents teachers and educators</p> Signup and view all the answers

    What is the break-even point?

    <p>The point at which income and expenses are equal</p> Signup and view all the answers

    Profitable businesses cannot face bankruptcy.

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

    What are fixed costs?

    <p>Costs that remain constant regardless of the business's output.</p> Signup and view all the answers

    A ___ is a work stoppage by employees to pressure employers.

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

    Match the following terms with their definitions:

    <p>Trade Union = An association of workers formed to protect and promote their interests Variable Costs = Costs directly linked to the production process Mark-up on Sales = A percentage added to the cost of a product to determine the selling price Legal Strike = Approved by the employer with pay for workers</p> Signup and view all the answers

    Which of the following is an example of a variable cost?

    <p>Raw materials</p> Signup and view all the answers

    Trade unions are protected by law in South Africa.

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

    What is the purpose of mark-up on sales?

    <p>To cover overheads and generate a reasonable profit.</p> Signup and view all the answers

    Study Notes

    Planned Economies

    • A planned or command economy is a system where the central government possesses control over every aspect of the economy, dictating production decisions.
    • These decisions encompass:
      • What goods and services are produced.
      • How those goods and services are produced.
      • The distribution of goods and services within society.
    • Common examples of planned economies are:
      • North Korea.
      • Iran.
      • China.

    Market Economies

    • In a market economy, the government possesses minimal control over the economic activities of its citizens.
    • This system operates based on the forces of supply and demand, with economic decisions primarily driven by individual consumers and businesses.
    • Prominent examples of market economies include:
      • The United States.

    Mixed Economies

    • Mixed economies combine elements of both planned and market economies.
    • The government plays a role in regulating certain industries and providing essential services such as education and healthcare.
    • Meanwhile, private businesses contribute to economic output and innovation.
    • Countries like South Africa and Britain exemplify mixed economies.

    Characteristics of Planned Economies

    • Centralized Control:
      • The government exerts complete control over all economic resources:
        • Land.
        • Natural Resources.
        • Factories.
        • Farms.
    • Limited Individual Property Rights:
      • Citizens are not allowed to privately own property.
    • Government-Directed Production:
      • The government meticulously determines and allocates what
        • Goods and services are produced.
        • Quantities of these goods and services are produced.
        • Who receives these goods and services.
    • Limited Career Choices:
      • Individuals are assigned roles and professions by the government, with limited choices for career paths.
    • Government-Managed Allocation of Resources:
      • The government provides individuals with essential necessities, such as food, housing, and healthcare.

    Advantages of Planned Economies

    • Focus on Social Welfare:
      • Planned economies prioritize improving the quality of life for all citizens.
    • Emphasis on Social Infrastructure:
      • Significant resources are channeled toward:
        • Healthcare.
        • Education.
        • Production capacities.
    • Equal Access to Education:
      • All citizens have equal opportunities to receive education.
    • Low Unemployment Rates:
      • Planned economies often maintain low unemployment figures.
    • Price Stability:
      • The government controls prices, making essential goods and services affordable for the majority of citizens.
    • Reduced Income Inequality:
      • The government sets wages and income levels, helping to bridge the gap between wealthy and less affluent individuals.
    • Efficient Resource Allocation:
      • Duplicate production efforts are minimized, leading to less waste and competition among businesses.

    Disadvantages of Planned Economies

    • Lack of Economic Freedom: Individuals have restricted choices, limited financial autonomy, and minimal control over their economic well-being.
    • Inefficiency:
      • The government's central planning often leads to inefficiencies and inadequate responsiveness to changing demands.
    • Lack of Innovation:
      • Limited competition and a lack of incentives for entrepreneurship often stifle innovation and creativity.
    • Supply and Demand Imbalances:
      • Government-controlled production often fails to meet the actual demands of consumers, leading to shortages or surplus.
    • Black Market Activities:
      • When the government heavily restricts economic activity, it can inadvertently bolster black market operations.

    Supply in Economics

    • Definition: Represents the amount of a good or service that companies are willing and able to provide at various price points.
    • Law of Supply: A fundamental economic principle: as the price of a product increases, the quantity supplied typically rises in response, and vice versa.
    • Supply Schedule: A tabular representation that outlines the quantity of a specific good or service supplied at different price levels.

    Primary and Secondary Sectors of the Economy

    Primary Sector

    • Definition: Focuses on the extraction of natural resources from the earth.
    • Examples:
      • Agriculture.
      • Forestry.
      • Fishing.
      • Mining.
      • Extraction of oil and natural gas.
    • Characteristic: Businesses operating within this sector form the first level of the economy.
    • Location: Typically situated outside urban centers.

    Secondary Sector

    • Definition: Involves transforming raw materials into finished goods.
    • Examples:
      • Food and beverage factories.
      • Clothing manufacturers.
      • Construction.
      • Motor vehicle factories.
      • Chemical plants.
      • Textile factories.
    • Characteristic: Businesses functioning within this sector constitute the second level of the economy.
    • Location: Usually located on the outskirts of cities or in industrial zones.

    Administration Function in a Business

    • Definition: The administration function encompasses the organization and recording of vital information for effective business management.
    • Characteristics:
      • Performing daily administrative tasks such as:
        • Handling emails and phone calls.
        • Managing accounts payable and receivable.
        • Filing and organizing information.
      • Planning, scheduling, record-keeping, and general organization.

    Public Relations Function in a Business

    • Definition: The public relations function revolves around managing and enhancing the internal and external image of a company.
    • Characteristics:
      • Ensuring customer satisfaction with goods and services.
      • Maintaining effective communication channels between internal stakeholders and external audiences.
      • Cultivating a culture of friendly and helpful staff interactions with customers.
      • Demonstrating corporate social responsibility by participating in community projects.
      • Boosting employee morale through organized social events.

    Risk Management Function in a Business

    • Definition: The risk management function involves proactively identifying, assessing, and mitigating potential risks that could impact a business.
    • Characteristics:
      • Identifying potentially detrimental risks within business operations and projects.
      • Assessing the seriousness and likelihood of these risks.
      • Developing and implementing risk management strategies to mitigate identified risks.
      • Monitoring and evaluating the effectiveness of risk management decisions.
      • Conducting regular risk management audits to ensure ongoing effectiveness.

    Business Plans

    • Importance:
      • A well-structured business plan is a crucial tool for attracting investors, securing bank loans, and ensuring financial stability.
    • Key Components:
      • Financial Plan: A comprehensive overview of the business's financial health including:
        • Initial and ongoing expenses.
        • Projections for profits and expenses.
        • Information on fixed and variable costs.
        • Break-even point analysis.
        • Mark-up on sales.
        • Profit percentage.
      • Fixed Costs: Expenses that remain constant regardless of the business's output level (e.g., rent, insurance).
      • Variable Costs: Expenses that directly fluctuate with the volume of production (e.g., raw materials, labor).
      • Break-Even Point: The volume of sales needed to cover all expenses, resulting in neither profit nor loss.
      • Mark-Up on Sales: A percentage added to the cost of a product to determine the selling price, intended to cover overheads and achieve a reasonable profit.
      • Profit Percentage: The percentage of profit generated from a product or service, calculated by dividing profit by selling price and multiplying by 100.

    Trade Unions and Strikes

    • Trade Unions:
      • Associations of workers established to safeguard and advance their interests.
      • Engage in negotiations with employers on matters like wages, benefits, and working conditions.
      • Legally recognized and protected in South Africa.
    • Strikes:
      • Temporary work stoppages initiated by employees to exert pressure on employers.
      • Types of Strikes:
        • Legal Strikes: Approved by the employer, workers receive their wages.
        • Illegal Strikes: Unapproved by the employer, workers do not receive wages.
    • Effects of Strikes on Businesses:
      • Negative Effects:
        • Disruption of normal business operations.
        • Potential damage to property.
        • Increased costs for the employer.
        • Potential job losses.
      • Positive Effects:
        • Resolution of workplace conflicts through negotiation.
        • Improved working conditions for employees.

    Roles and Responsibilities of Trade Unions

    • Negotiation and Advocacy:
      • Representing workers in discussions with employers to improve working conditions and secure better compensation.
    • Dispute Resolution:
      • Facilitating peaceful negotiations and mediations between workers and employers to resolve conflicts.
    • Training and Education:
      • Providing workers with skills and knowledge related to labor rights, collective bargaining, and workplace procedures.
    • Collective Bargaining:
      • Engaging in negotiations with employers on behalf of their members, seeking better wages, benefits, and working conditions for all.
    • Legal Representation:
      • Providing legal support to workers who face unfair treatment or violations of their labor rights.

    South African Trade Union Logos

    • COSATU (Congress of South African Trade Unions): Represents a vast network of workers across various sectors.
    • FEDUSA (Federation of Unions of South Africa): Represents workers in diverse industries.
    • NUM (National Union of Mineworkers): Focuses on protecting the interests of workers in the mining sector.
    • SAMATU (South African Municipal Workers' Union): Represents workers employed by local governments.
    • NAPTOSA (National Professional Teachers' Organisation of South Africa): Stands up for the rights of teachers in South Africa.
    • SADTU (South African Democratic Teachers' Union): Another significant union advocating for educators.

    These are just a few examples of the many active trade unions in South Africa, each dedicated to representing the interests of its specific group of workers.

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    Description

    Test your understanding of key concepts in economics, including the law of supply, market equilibrium, and the activities of different economic sectors. This quiz challenges you to match sectors with their primary activities and identify factors affecting supply. Perfect for students looking to solidify their grasp of these essential topics.

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