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Questions and Answers
What are the six key concepts of Economics and Business?
Scarcity, Making choices, Specialisation and trade, Interdependence, Allocation and markets, Economic performance and living standards.
What does the term 'economics' derive from?
Scarcity refers to the abundance of resources available to satisfy human wants.
False
What does 'making choices' signify in economics?
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What is the meaning of 'specialisation' in economics?
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Define interdependence in the context of economics.
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What is the main purpose of resource allocation in a business context?
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Which economic question addresses the needs and preferences of consumers?
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Why might a company choose to produce ethical products?
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How do consumers influence businesses according to consumer demand?
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What is one potential consequence of poor resource allocation in a business?
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Which of the following best describes a method to produce goods efficiently?
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What role does competition in the market play in relation to production methods?
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Which target market group is likely to prioritize healthy options when making purchases?
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What is the primary goal of a business in terms of production?
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Which factor is NOT considered when answering the question 'What to produce?'?
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Whom do businesses primarily produce goods and services for?
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What influences the choices businesses make regarding how to produce their goods?
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Why is competition an important factor for businesses when determining what to produce?
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Which question is NOT one of the fundamental economic questions businesses must address?
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What is a potential consequence of not accurately assessing the availability of resources?
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How does determining the 'how to produce' influence the success of a business?
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What factor contributes to the success of some businesses by providing an abundance of resources?
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How does competition typically influence businesses?
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What is meant by 'economies of scale' in production?
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What demographic characteristic is commonly used to define a target market?
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Which method is NOT a way businesses can reduce production costs?
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Which example illustrates a business being successful due to high demand and low supply?
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What is a likely effect of having many competitors in a market?
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What typically happens when a business implements technology to replace human workers?
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Study Notes
Introduction to Economics
- Economics studies how we manage resources to fulfil unlimited needs and wants with limited resource availability.
- The term "economics" comes from the Greek words "oikos" (meaning house) and "nomos" (meaning management), emphasizing the management of resources within a "household" or societal unit.
Six Key Concepts of Economics
- Scarcity: Unlimited needs and wants collide with limited resources, creating the fundamental economic problem.
- Making choices: Individuals, businesses, and governments constantly make choices on how to allocate resources and satisfy needs and wants.
- Specialisation and Trade: Focusing on specific production areas and exchanging goods and services enable efficiency and competitiveness.
- Interdependence: Individuals, businesses, and countries rely on each other to satisfy their various wants.
- Allocation and Markets: Resources are allocated, and exchange of goods and services happens through markets.
- Economic performance and living standards: The overall well-being of individuals and societies is influenced by economic performance.
What to Produce?
- Businesses make decisions about what to produce by researching the available resources in society.
- Businesses choose to produce goods and services that are in high demand but in low supply, this is because they can charge a premium price.
- Businesses may also choose to produce goods and services that are in high demand and readily available, this allows them to maintain a competitive price and cater to a large market segment.
- The availability of resources is important and can affect the profitability of businesses in a particular industry.
- Some businesses succeed because there is an abundance of available resources for example, solar panels in Australia use an abundant resource - sunlight
- Businesses must also consider competition when determining what to produce.
- Businesses may experience a reduction in income if they are selling the same product as numerous other businesses.
- Businesses may need to innovate, improve their products and offer competitive pricing to attract customers.
- Competition can also create opportunities for businesses to innovate.
How to Produce?
- Businesses attempt to keep production costs at a minimum to increase profits
- Businesses can lower production costs by using economies of scale, in which they increase production by using the same resources to generate more goods, which will result in a lower cost per unit.
- Businesses can also use cheaper materials, lower wages or produce products overseas to reduce production costs.
- Companies can reduce their reliance on labor by using machinery to replace human workers.
For Whom to Produce?
- A target market is created by businesses to aid in determining who to produce for.
- A specific group of customers with similar characteristics is known as a target market.
- Businesses can categorise consumers using their income, age, and geographic location.
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Description
Test your knowledge on the fundamental concepts of economics, including scarcity, choices, specialization, and trade. This quiz covers the critical principles that govern economic interactions and resource management. Understand how these concepts shape decision-making in economies worldwide.
