An organisation

Why do we need organisations?

Profit Seeking Organisations

Not for Profit Organisations (NFP)

Mutual Organisiations

Public Sector Organisations

Private Sector Organisations

Co-Operatives

A queue of people standing at a bus stop is an example of an organisations if they all want to travel to the same place.
True or False?

Which of the following best completes the statement: "Financial considerations are not a constant constraint in NFP organisations because..."
A) They have no profits to reinvest
B) They meet the needs of people who cannot afford to pay very much
C) They do not have a flow of sales revenue
D) Their prime objectives are not financial but they still need money to enable them to reach them

Which of the following is not a key stakeholder group for a charity?
A) employee and volunteers
B) shareholders
C) donors
D) beneficiaries

Which one of the following would not be a stakeholder for a mutual society?
A) shareholders
B) customers
C) employees
D) managers

Some building societies have de-mutualized and become banks with shareholders. Comment on how this may have effected lenders and borrowers.

Which of the following are usually seen as the primary objectives of companies?
(I) to maximise the wealth of shareholders
(II) to protect the environment
(III) to make profit
A) I, II, & III
B) I & II only
C) II & III only
D) I & III only

Many schools run fundraising events such as fêtes, where the intention is to make a profit. This makes them "profit-seeking".
True or False?

Attempts to measure and increase shareholder value have focused on incorporating 3 key issues:

Many variables will affect the value of shares. These fall into 2 groups:

Stakeholders

Stakeholder Interest

Stakeholder Influence

Three main economic systems:

Market Economy

Command Economy

Mixed Economy

free market

Individual Demand

When the demand for a good or service changes in responses to a change in price, the change is referred to as:
1)
2)

Demand Curve

Market Demand

Conditions of Demand

Reminder on
INCREASES/DECREASES
EXPANSION/CONTRACTION

A demand curve is drawn for JMD, a health supplement provider, assuming all but one of the following remains unchanged. Which item can vary?
A) The price of the competitor's price
B) The cost of labour to make the product
C) The price of the product
D) The level of growth in the economy

Which one of the following would lead to the demand curve for health supplements shifting to the right?
A) Adverse publicity that suggests supplements to be harmful
B) A fall in disposable income of consumers
C) A fall in the price of supplements
D) An increase in the size of the population due to people living longer

Which of the following would not lead to a shift in the demand curve for overseas holidays?
A) An advertising campaign by holiday-tour operators.
B) A fall in the disposable income of consumers
C) A rise in the price of domestic holidays
D) A rise in the exchange rate for the domestic currency

Two ways of calculating Price Elasticity of Demand (PED):

Principals

Agents

Principal-Agent Problem

Corporate Governance

A company makes personalised gifts, which of the following is not a prime objective of corporate governance:
A) to control directors' activites
B) to improve the way the company is run
C) to improve employee's working conditions
D) to protect shareholder interest

Give 2 reasons why shareholders may lose control of the company they own.

Summary of price elasticity:

Price Elasticity of Demand

Factors that influence PED

Using the factors that influence PED, consider if the demand for petrol to be elastic or inelastic.

PED and total revenue

If the demand for a good is price elastic, a fall in its price will lead to:
(i) a rise in unit sales
(ii) a fall in unit sales
(iii) a rise in total sales revenue
(iv) a fall in total sales revenue

A) (i) & (iii) only
B) (i) & (iv) only
C) (ii) & (iii) only
D) (ii) & (iv) only

Supply Curve (supply)

Market Supply Curve

Conditions of supply

Summary Elasticity of Supply

Price Elasticity of Supply

Factors that influence elasticity of Supply

Using the factors that influence elasticity of supply:
Is the supply of fresh milk price elastic or inelastic?

What effect will higher wages have on the supply curve?

Equilibrium

When the price of a good is held above the equilibrium price, the result will be:
A) excess demand
B) a shortage of the good
C) a surplus of the good
D) an increase in demand

When the price of a good is reduced and held below the equilibrium price, the result will be all except one of the following:
A) excess demand
B) a shortage of the good
C) a surplus of the good
D) an expansion in demand

Equilibrium Changes

Much of the world's coffee is grown in South America. By use of supply and demand curves explain what would happen to the price of coffee if bad storms in South America damaged much of the coffee crop.

Market Failure

Public goods

Public goods:
non-excludability

Public goods:
non-rivalry

Pure public goods are goods:

A) which are produced by the government
B) whose production involves no externalities
C) whose consumption by one person implies less consumption by others
D) where individuals cannot be excluded from consuming them

Economies of Scale

Externalities

One way of reducing negative externalities:

True or False?
The cost of packaging for cigarettes is a negative externality.

True or False?
The benefits to society from education are a positive externality.

True or False?
The fine incurred for polluting a watercourse is a negative externality.

True or False?
Damage to pine forests from pollution is a negative externality.

Merit Goods

Demerit Goods

Which of the following are examples of merit goods?
A) street lighting True or False?
B) education True or False?
C) healthcare True or False?
D) defence True or False?

Competition Policy

Scope of Regulation (competition policy):
Mergers and Acquisitions

Scope of Regulation (competition policy):
Restrictive Trade Practices

Scope of Regulation (competition policy):
State created regional monopolies

Which of the following is not a valid economic reason for producing a good or service in the public sector?
A) The good is a basic commodity consumed by everyone
B) It is a public good
C) There is a natural monopoly in the production of the good
D) It is a merit good

Government sets minimum prices

Government sets maximum prices

A government introduces a minimum price below free market price. Which one of the following describes the consequences of this?
A) There will be no effect on market price or producer incomes
B) Suppliers will withdraw from the market due to falling incomes
C) Unsold surpluses of the product will build up
D) Demand for the product will contract

Diseconomies of Scale

Internal Economies of scale

(internal economies of scale)
technical economies

(internal economies of scale)
financial economies

(internal economies of scale)
trading economies

(internal economies of scale)
managerial economies

External Economies of Scale

Technical Diseconomies of scale

Trading diseconomies of scale

Managerial diseconomies of scale

In a company such as ESD, a calculator manufacturer, which of the following is not a source of economies of scale?
A) The introduction of specialist capital equipment
B) Bulk-buying
C) The employment of specialist managers
D) Cost savings resulting from new production techniques

A good has a price inelastic demand. If the supply curve shifts to the left the result will be a rise in price and:
A) a decrease in demand and a fall in total expenditure on the good
B) a decrease in demand and a rise in total expenditure on the good
C) a contraction in demand and a fall in total expenditure on the good
D) a contraction in demand and a rise in total expenditure on the good