commerce term 3 key info.docx

GLOSSARY - Boom = people spend more money, companies make more, more people are employed, more people have more money \-- cycle - Recession = opposite of booms, people aren\'t as confident and don\'t spend as much money, not enough money in companies to buy more product to sell, no...

GLOSSARY - Boom = people spend more money, companies make more, more people are employed, more people have more money \-- cycle - Recession = opposite of booms, people aren\'t as confident and don\'t spend as much money, not enough money in companies to buy more product to sell, not as many people employed, not as many people have money -- cycle - Consumption = the purchase of goods and services - Capital = goods or services that are used as inputs in production, e.g. land, labour and capital (the machinery, buildings and equipment used to produce goods and services) - Exports = goods and services produced by Firms in Australia and sold to other countries - Financial sector = banks and other financial institutions - Firms = businesses in the economy - Government expenditures = money the government spends on public goods and services - Government sector = the national, state and local government - Households = individuals in the economy - Imports = goods and services produced by businesses in other countries and sold to Australia - Income = money received, e.g. wages, rent and interest - Loan = money the Financial sector lends to Firms to spend on machinery, buildings and equipment - Production = goods or services produced to be sold - Trades = the economic transactions of the economy with the rest of the world, e.g. how resources flow between Australia and its trading partners - Investments = money saved - Taxation = money paid to the Government - Savings (S) = the money one has saved, especially through a bank or official scheme. - Taxation (T) = the levying of tax. - Imports (M) = bring (goods or services) into a country from abroad for sale. - Leakages = capital or income that escapes an economy or system in the context of a circular flow of income model - Investment (I) = the production of goods that will be used to produce other goods - Government expenditure (G) = money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, defence, and social protections. - Exports (X) = send (goods or services) to another country for sale. - Injections = the introduction of income into the flow, such as additions to investment, government expenditure and exports. - Economies = the state of a country or region in terms of the production and consumption of goods and services and the supply of money. - Sector = an area of the economy in which businesses share the same or related business activity, product, or service. - Interdependence = the mutual dependence of the participants in an economic system who trade in order to obtain the products they cannot produce - Economic growth = an increase in the size of a country\'s economy over a period of time \--\> size of an economy is typically measured by the total production of goods and services - booms = a period of strong economic expansion where many businesses are operating at full capacity or above capacity, and the unemployment rate is very low - recessions = a sustained period of weak or negative growth in real GDP (output) that is accompanied by a significant rise in the unemployment rate - Level of economic activity = takes place when resources such as capital goods, labour, manufacturing techniques or intermediary products are combined to produce specific goods or services - Gross domestic Product (GDP) = standard measure of the value added created through the production of goods and services in a country during a certain period. As such, it also measures the income earned from that production, or the total amount spent on final goods and services (less imports) - Expansion = an upward trend in the business cycle, increase in production and employment increasing income and spending - Contraction = Phase of business cycle when the whole economy is in decline, occurs after a business cycle peak - Peak = A month in which economic indicators reach their highest level, followed by a significant decline in economic activity - Trough = Marks the low point of economic cycle - Recession = Period of weak or negative growth - Depression = Sustained drop in economic activity - Retail markets = Where makers and distributors sell and consumers buy, sale of good and services, e.g. Westfields or local supermarkets - Labour markets = Supply and demand of labour, employees supply and employers demand - Financial markets = Place or system that provides buyers and sellers the means to trade financial instruments, e.g. bonds, equities, international currency etc - Stock markets = Referring to the price of shares, buying and selling of shares, where investors buy and sell shares of companies. - Trade = buying and selling of goods and services - Barter = Exchange, goods or services, no money - Trade Route = Long distance, commercial goods, transported - ACCC = Australian Competition and consumer commission - Online Businesses = A business which runs on some or all of its business using the internet - On-demand businesses = Uses mobile technology such as apps to maximise consumer convenience - Small Businesses = A business with 5-19 employees - Medium Businesses = A business with 20-199 employees - Large Businesses = A business with 200 or more employees - Global Businesses = A large company that has branches in many different countries - Offshore Businesses = A business that completes different functions in different countries - Government Business = Government owned and operated - Not-for-profit business = Provides services to the community and does not earn a profit for its owners - Technology = Application of scientific knowledge for practical purposes especially in industry - Artificial Intelligence = When computer systems are able to perform tasks normally requiring human intelligence - Revenue = Income, especially when of an organisation and of a substantial nature - Recessionary cycle = - A diagram of a recession Description automatically generated - \'Boom\' cycle -  - Globalisation = When businesses or other organisations develop international influence or start operating on an international scale. - Drivers = are driven by solutions they think they can see better than everyone else - Explorers = are fascinated by the complex problems no one else has been able to solve - Crusaders = similar to drivers but focused on a mission rather than a business solution - Captains = fall into or seize and opportunity that comes their way by chance. - Entrepreneurship = A process that people take up to address a work challenge or fulfil a social purpose. An entrepreneur is a person who set up a business or businesses taking financial risks in hope of profit. - Innovation = Make changes in something established, especially by introducing new methods, ideas or products - Corporate Social Responsibility = Corporations have a degree of responsibility not only for the economic consequences but also for the social and environmental implications - Ethical decision making = The process of evaluating and choosing alternatives consistent with ethical principles 2.2: FIVE SECTOR CIRCULAR FLOW MODEL Circular flow of income \--\> Link between consumers, businesses - - - - - - - Harry Buys Five Green Olives - - - - - - - - - - - - - - - Imports, taxation, savings - - Exports, investment, government expenditure - - - - 2.3: INTERDEPENDENCE OF DIFFERENT SECTORS OF THE ECONOMY \- ASIC = Australian Securities and Investments Commission 2.4: THE BUSINESS CYCLE \- Business cycle is the cyclical fluctuations in the general level of economic activity Periods of high and low economic activity \- Boom \--\> things are going great Everyone has money Everyone is employed \- Recession \--\> opposite of boom \- Contraction, things are going bad Consumer spending is low Level of unemployment rises Wages may fall Economic Downtum More businesses go bust Firms postpone investment, reduce production and reduce demand for labour Reduced consumption Higher unemployment More people on social welfare \- Expansion, things are going good Increasing consumer spending Interest rates eventually rise Level of unemployment falls Wage rates may rise  2.5A : THE PRICE MECHANISM -- DEMAND Demand is the **quantity of a particular good or service that** consumers are **willing and able to purchase** at **a particular price a**t a given point in time**.** - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2.5B: THE PRICE MECHANISM -- SUPPLY Supply is the quantity of a good or service that all the firms in a particular industry **are willing and able to offer for sale** at different price levels, at a given point in time - Law of supply - As the price of a product increases the supply will also increase - Supply curve - upward sloping as low quantities are supplied at low prices (vice versa) - Expansion and contraction of supply - Change in price of the good itself cause and expansion or contraction in supply - a movement ALONG the curve - Increase in price will cause an expansion of supply - Decrease in price will cause a contraction of supply - Shifts in supply curve - Increase in supply - outward shift in supply (right) - Generated by factors other than the price - Resulting in a decrease in price or an increase in quantity - Decreased in supply - inward shift (left) - Generated by factors other than the price - Increase in price or an decrease in quantity - May be caused - Fall in the price of the other goods - An improvement in the production of technology - A fall in the coast of the factors of production - Increase in quantity of resources - Climatic or seasonal change making it more favourable to produce - Reasons for increases and decreases in supply - Increases - Increased efficiency - Fall in cost of production - Improved climatic conditions - Rise in number or suppliers - Decreases - Decreased efficiency - Rise in cost of production - Fall in number of suppliers 2.5c: THE PRICE MECHANISM -- EQUILIBRIUM - Relationship between supply and demand - Price on y axis, quantity on x axis - Supply curve is upward sloping - Market equilibrium = point where supply and demand curve overlap - Intersection (point A) of supply and demand = quantity supply and quantity demanded - Equilibrium occurs when quantity demanded = quantity supplied - Point A = price equilibrium and quantity equilibrium 2.7: WHAT IS A MARKET? \- Any place where makers and distributors sell and consumers buy Market means marketplace \- Can also refer to the whole group of buyers \- Businesses who operate in markets are normally in competition with other markets \- Markets sometimes mean stock markets When a market is through the roof! Referring to the price of shares ○ Buying and selling of shares People buy shares = price goes up\...vice versa \- Target market Before trying to find potential buyers you have to define your target market \- Market forces Push prices up when supply declines and demand rises They are the factors that influence the price and availability of products or services 2.10: GOVERNMENT INTERVENTION IN THE MARKET \- Under the **Competition and Consumer Act 2010 (CCA)**, consumer protection covers the following areas: - unfair contract terms - consumer rights when buying goods and services - product safety - unsolicited consumer agreements covering door-to-door sales and tele marketing - implemented by the federal government agency ACCC (Australian Competition and Consumer Commission) 2.12: FACTORS INFLUENCING BUSINESS DECISIONS Negative impacts of technology on the following - Business - Cyber security - Privacy concerns - Job displacement - Reduced team cohesion - Distraction and reduced productivity - Economy - Job displacement - Income inequality - Market concentration - Privacy concerns - Digital divide - Society - Social isolation - Privacy issues - Mental health - Digital divide - Reduced attention span - Health issues - Ethical concerns 2.13: ENTREPRENEURSHIP AND INNOVATION 1. Characteristics of entrepreneurs - 50% of all start ups fail within the first four years and over 90% within the first ten - Entrepreneurs are highly optimistic or even overly optimistic individual - Ability to set goals and the plan how to meet them allows entrepreneurs to focus on what is ahead of them and achieve those goals - Self doubts of an entrepreneur - Constantly question if they\'ve made the right choices - Often feel like they don\'t know what they are doing - Feel overwhelmed by everything they have to do - Feel distant lonely and isolated from other people - Key to successful entrepreneurs is the ability to manage money and understand finances - A good entrepreneur need to have good communication skills - It is important for an entrepreneur to have knowledge in the industry because without it is harder for an entrepreneur to identify and calculate the risks. It also allows them to better understand the needs of the business and potential customers as well as the challenges they are likely to face - Different types of entrepreneurs Drivers = are driven by solutions they think they can see better than everyone else Explorers = are fascinated by the complex problems no one else has been able to solve Crusaders = similar to drivers but focused on a mission rather than a business solution Captains = fall into or seize and opportunity that comes their way by chance. - Skills that help entrepreneurs - The ability to manage money and understand finances - The ability to identify the strengths and weaknesses of possible decisions - Problems-solving skills and creative thinking skills - Communication skills to help them understand others and explain themselves 1. Successful entrepreneurs - Personality traits common among entrepreneurs - Many feel passion or enthusiasms for the work they do - Many are highly optimistic or even overly optimistic individuals - A strong work ethic is critical for many to maintain their businesses - Many are not scared of failure, and may fail several times before they succeed