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| Question | Answer |
| What is an Organisation? | A organisation is social arrangement which pursues collective goals which controls its own performance and has a boundary separating it from its enviroment. |
| What are the characteristics of an organization? (name three) | -preoccupied with performance and meeting or improving their standards -contain formal, documented systems and procedures which enable them to control what they do -different people do different things or specialize in one activity - they pursue a variety of objectives and goals - most organization obtain inputs, and process them into outputs |
| Why do Organsations exist? (Name Three) | Overcome peoples individual limitations, enable people to specialize in what they do best, saves time because people work together, accumulate and share knowledge, enable synergy, enable people to be more productive. |
| How do Organsations differ? Give three examples and explain. | Ownership, Control, Activity, Profit/Non-Profit orientation, Legal Status, Size, Sources of finance, Technology |
| What is the difference between a private and private sector organizations? | Public sector run by government and they provide public services & goods. Private sector is run by individuals or companies. They are the opposite of public sector. |
| What is limited company? What does Limited Liability mean? | A limited company is where shareholders have limited liability. This means that they cannot be sued for the debts of the company unless they have given some personal guarantee. Their risk is up to how much they have invested. |
| Explain what shareholders are and how they run a organization. | Shareholders are owners of a organisation, who have invested their capital in return for dividends. Shareholders tend to be less interested in the day to day running of the firm. They usually vote/sac directors depending on their performance and the dividends they may receive. |
| What are executive and non-executive directors? | Executive directors usually sit on the board and are involved in the the day to day running of the organisation. Non-executive directors provide their services such as skills and expertise to the board. |
| Define Operational Management. | Operational management is where career managers are recruited to run the day to day operations of the organisation. |
| Explain the difference between a private limited and public limited company? | Private limited - small number of shareholders, usually family run, shares sold depending on the board. Directors tend to hold most shares. They raise finance via the founder, promoter, business associates and venture capitalists. A public limited company is where the general public usually own shares in the company. They can be easily sold on the stock exchange market such as FTSE. Public limited companies raise finance by creating and selling more shares on the stock exchange. |
| Explain the advantages and disadvantageous of limited companies. | Advantages - raise finance easily, more flexible, reduced risk due to limited liability, ownership separate from control, shareholders need not get involved day to day running of firm. Disadv- Legal complaince cost, limited liability, company needs to audited |
| What does the public sector comprise of? | Firms regulated by the Gov, Armed Forces, Education, Postal, NHS |
| What are the characteristics of the public sector? | Accountability, Funding, Demad for public resources, Limited resources. |
| What are the Advs and Disadvs of the public sector? | Fairness, Filing gaps left by private sectors (public goods), public interest, economies of scale, cheaper finance, efficiency. Disads - accountability, interference (politics), cost. |
| What is an NGO? and What are the organizational features of it? | NGO - non governmental organisation, that is a nonproft and not related to the government or anyone. Nor do the get help features: -funding via events, donors, grants -employs volunteers or paid full time employees - they have skills in media, advertising, experience in budgeting and planning |
| What is a co operative society and how do they differ from limited companies? | Co-operative - owned my its customers/works who share profits. features: open membership, democratic control (One member, one vote), Distribution of surplus in proportion to its sales and promotion of education. |
| What are mutual associations? Give an example and explain what a credit union is? | MA - similar to co operatives in that they are owned by their members. CU - Are examples of MA's owned and controlled by their members. |
| What are stakeholders? Explain what internal, external, connected stakeholders are and give examples. | Stakeholders - individuals or groups that are interested in the running of a organisation and what it does. IS - employees & managers ES - Govm charities, community and pressure groups. CS - customers, shareholders, suppliers and bankers/finances. |
| Explain what internal stakeholders issues and interest are in an organisation. What action do they take if they are not happy with organisation? | IS - interest of continuation and growth of organisation, seek to be paid, have jobs (secured), be promoted, have satisfaction and benefits. should their not be met by the organisation, they will not pursue shareholders goal. the can resign, force industrial action |
| Explain what connected stakeholders issues and interest are in an organisation. What action do they take if they are not happy with organisation? | Shareholders - interests in a firm is their wealth and amount of risk involved. They seek a good dividend stream. the may react by selling off shares, de-investment or voting/sacking directors if their goals are not followed through. Customers - seek quality products, good customer service, reasonable prices, ethical issues. they may respond by suing organisation, stop purchase and going the their competitors. Bankers/Financiers - interests include the organisation paying loan payments in time and not participating in risky activities, also that they stick to loan agreements. They may respond by future no credit available or loans . Receivership and higher interest charges. Suppliers interest includes payments for goods/services on agreed and the organisation is making a good revenue from sales. should their interest not be agreed to they take court action, refuse credit and have a bad relationship. |
| Explain what external stakeholders issues and interest are in an organisation. What action do they take if they are not happy with organisation? | Giv- interest in firm is that organisation provides jobs, training and pay thier taxes. should organisation not adhere to these Gov can take legal action, fine, regulate them or charge higher taxes. |
| What is the difference between Primary and Secondary Stakeholders? | Primary - have contractual relationship with organisation. (Connected and Internal stakeholders) Secondary - is the opposite of primary (external stakeholders) |
| Discuss what happens during a conflict between a shareholder and manager of a organisation. | -manager focuses on maintain corporation as vehicle for their management skills -shareholders wish to see changes that benefits them such as enhancing dividends stream and value of shares increasing. This can cause conflict of interest. As such shareholders may sack/vote manager. |
| Draw stakeholder matrix and using it explain the relationship organisation should seek with stakeholders. |
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| How is stakeholder mapping used to assess the significance of stakeholder groups? | Organisation should: - use corporate governance to recognize stakeholders levels of interest and power -they should seek to reposition certain stakeholders and discourage others from repositioning themselves, depending on their attitudes -key blockers and facilitators of change must be identified Each of these groups has three choices: Loyalty, Exit, Voice |
| How can existing structures and systems channel stakeholder influence? | location of power, conduits of information, limit choice, embody culture, determine the successful implementation of strategy and the different degrees of dependency of various stakeholder groups. |
| How can you measure stakeholder satisfaction for Employees, Gov, Distributors? | Employees- Staff turnover, pay and benefits relative to market rate and job vacancies Gov - Pollution measures, annual returns, taxes, accident rate and energy efficiency. Distributors - share of joint promotions paid for, rate of running of inventory |
| Explain "Johnson and Scholes's" environmental analysis procedure | 1-assess the nature of the environment 2-identify the influences that have affected the organisation in the past or likely to do so in future 3-prepare a structural analysis identifying the key forces at work in the immediate or competitive environment 4-what is the organisation position in relation to other organizations? 5-what threats and/or opportunities are posed by the environment? |
| State two ways organizations can be analyzed and explain. | Global/Local - Different organizations operate at different places around the world. Some may adhere to local requirements. General/Task - general environment refers to external factors. Task refers to internal factors |
| What is PEST? What does each letter abbreviate to? | PEST is external factor affecting a organisation. Political, Environmental, Social-Cultural and Technological |
| Explain how uncertainty in the environment be assessed along two axes, simplicity/complexity and stability/dynamism. |
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| What are the changes in the business environment that have driven new developments? | - Globalization of businesses - Science and Technology developments -Mergers, acquisitions and strategic alliances -Changing customer values and behavior -Increased scrutiny off business decisions by gov and public -increased liberalization of trade, and deregulation and co-op between gov n businesses -changes in business practices - Changes in the social and business relationships between companies and their employees, customers and other stakeholders |
| How does the political environment affect firms? | -a basic legal framework exists -the government can take a particular stance on an issue of direct relevance to a business or industry - The governments overall conduct of its economic policy is relevant to business |
| State three legal factors that affect all companies. Give examples. | - General Legal Framework: basic way of doing things - Criminal Law: Theft, insider dealings, bribery, deception - Company law: Directors and duties, reporting requirements, takeover proceedings, insolvency, shareholder rights - Employment Law: trade unions, minimum wage, unfair dismissal, redundancy, maternity, equal opportunities - Health and Safety Law: fire precautions and safety procedures - Data Protection: use of information about customers/workers - Marketing and Sales: laws to protect consumers and advertising requirements/law - Environment: Pollution and Waste disposal - Tax Law: Corporation Tax, income tax, NI, VAT |
| How can the government directly influence the economic structure of an industry? Give three examples and explain. | Capacity expansion - gov can encourage firms to increase to decrease their capacity through Capital Allowances and Incentives to encourage foreign investment in industry/area. Demand - Gov is major customer and can influence demand vie legislation and taxation(tax reliefs and subsidies). Emerging industries - can be promoted or damaged by the government Entry Barriers - Use of Government policy, Tariffs and Quotas. Competitions- Regulation and Control by Government |
| State one way businesses can influence government policies? | - They can employ lobbyists to put their cases to MP's and Civil Servants - They can give MP's non-executive directorships so they may help with legislation - They can influence public opinion thus legislative agenda through advertising |
| State two reasons why organisations encourage retirement. | -Promotion Opportunities for Younger People - Early retirement instead of redundancy - Age structure of a organsation may become unbalanced - The cost of providing pensions rises with age |
| What is an exit interview? Why do organisations use it? | When a person resigns they explain why they made that decision. It is a valuable source of information and organisation may use it to understand and retain skilled employees. |
| What is 'The period of notice'? | Where employess of an organisation must give a length of time before they quit to allow an organisation to recruit another person to their role. The length of time depends on what is stated in the contractual employment agreement. |
| What are the three forms of terminaton that consitute dimissal under UK Law? | - Termination of an employees contract by employer - The ending of a fixed term contract without renewal - Resignation by the employee where the employer's conduct breaches the conduct of employment. |
| What is constructive dismissal? | Where employee may resign from organisation when employer/s conduct has breached the contract of employment. |
| What is wrongful dismissal? | Is a dismissal that breaches the contract of employment |
| What is Unfair Dimissal? | Dismissal without a good reason, it need not be wrongful to be unfair. |
| Under what two circumstances can Redundany be dismissal? | Employer has ceased to carry on business at all or where there employee was working The requirements of the business for employees to carry out work of a particular kind have ceased or diminshed or are expected to. |
| Under what three circumstances is an employee who has been made redundant not entitled to compensation? | -The employer has made an offer of suitable alternative employment and the employee as unreasonably rejected it - The employee is of pensionable age or over or has less then two years left -employees conduct merits dismissal without notice |
| State three ways the impact of a redundancy programme can be reduced? | - Retirement of staff over the normal retirment age - Early retirement to staff approaching normal retirement age - Restrictions on recruitment to reduce the workforce over time by natural wastage - Dimissal of part-time or short-time contract staff -Offering retraining and/or redeployment withing the organisation - Seeking voluntary redundancies |
| State three ways the impact of a redundancy programme can be reduced? | - Retirement of staff over the normal retirment age - Early retirement to staff approaching normal retirement age - Restrictions on recruitment to reduce the workforce over time by natural wastage - Dimissal of part-time or short-time contract staff -Offering retraining and/or redeployment withing the organisation - Seeking voluntary redundancies |
| What is Privacy? | Is the right of the individual not to suffer unauthorised disclosure of information |
| What is Data users? | Data users are organisatins or individuals who control personal data and the use of personal data |
| State two rights a data subject has? | -Seek compendation - Seek data of them to be put right through courts - May ask for access to thier personal data held - Can sue organisation/person who has used thier data and caused damaged/harm to them |
| State two employer duties in reference to health and safety at work | -They must ensure work practise is safe - work enviroment is safe and healthy - They encrourage training, supervison etc for safe working practises - Safety policy should be be clearly communicated to all staff - Employers must carry out risk assessment and safety checks - Share hazard and risk info with other employers - introduce controls to reduce risk - Identify employees who are at risk - Employ competent safety and health advisors |
| State two employees duties in relation to health & Safety at work? | -Take reasonable care of themsellves ad others - Allow employers to carry out his or her duties -To use machinery in sensible manner and take care - Inform employer of any situtation which may be a danger - Use all equipmeny properly and safely |
| State two impacts of accidents at a work place to an organisation | - Time is lost by injured employee - Direct costs (damage, repair, disruption of operations, compensation, increased insurance premiums etc) - Output reduced due less employees - Costs of recruitement and training for injured employees. |
| State two ways accidents at work place can be reduced? | - Develop safety conscious among staff - Develop effective consultative particpation - Give information/instrcutions on safety rules & measures - Spend of good maintence and servicing of equipment - Implement in full the code of practice - Safety inspections and risk assements |
| State two features a 'Health and Safety Policy' may have | - Statement of principle - Detail of safety procedures - Complaince of loaw - Details instructions on equipment usage - Training requirements |
| What is a contract? | A legally binding agreement |
| What is a social class? | The basic idea of class is that society can be divedved into broad strata which comprise individuals, whose memebers share common features such as type of occupation, income level, education background and other variables. |
| Define span of control. | Number of subordiantes responsbile to a superior |
| What is the difference between centralised and decentralised systems? | C - means holding and processing data in a central place. (near or at Head Office) DC - means data proccessed at different locations away from centre and head office |
| How has IT affected employee and employer relationshio? Give two examples | - Reducded need to follow chain of command - Information overload - nature of work - Close business relationships regardless of geographical location - More flexible working arrangements - Greater monitoring and control |
| What is Delayering and Downsizing? | Delayer - reduction in number of layers of a management Hierachy Downsizing - make business smaller: to reduce the size of a business or organization, especially by cutting the work force or a department/function/task |
| Explain what outsourcing means? | Is the contracting out of speecified opertaions or services to an external vendor |
| State at least two classifications of Outsourcing. | - Ad hoc - Project Management - Partial - Total |
| State two advantages and disadvantages of Outsourcing. | Ads: - It can remove uncertainty about cost - Long term contracts of Outsourcing may encourage planning - Outsourcing can bring economies of scale - Ability to retain skills and knowledge - New skills and Knowledge is available - Flexibility Disads: - Information problems - Leak of highly confidential information - Locked into unsatisfactory contract - Use of outside sourcing does not encourage awarness to potentials costs oor benefits of IS/IT. |
| What is enviromental footprint? | It is the impact that a business's activities have contributed to climate change |
| What are the impacts on the enviroment from economic activities? State two | - Depletion of natural resources - Noise and aesthtic impacts - Residual air and waste emissions - Long Term waste disposals - Uncompenstaed health affects - Change in local quality of life |
| What is the impact on an organisation of eniviromental costs? State three | - Waste management - Compliance costs - Permit Fees - enviromental training - Enviromental driven rearch and development - Enviromental rellated mainitenance - Legal costs and fines - Enviromental assurance and bonds Enviromental certification and labeling - Natural Resource inputs - Record keeping and reporting |
| What is SWOT Analysis? | A method of enviromental analysis to look at an organisations internal strengts and weaknesses External Opportunities and Threats |
| What does value activities mean? | When an organistion puts value into its product |
| What is Porters Five Forces Model? | Barriers to entry, Subsitute products, the bargining power of customers, the bargining power of suppliers, competitive rivalry |
| What is Aggregate Demand and its components? | AG= C+I+G(X-M) The total demand in the economy for goods and services |
| What is Aggregate Supply? | The ability of the economy to produce goods and services |
| What factors affect the economy? State 3... | Invesment levels, confidence, The multiplier effect, Inflation, Int Rates, Exch Rates, Savings |
| Using AD and AS demand analysis explain a shift in AD. |
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| When economy is at full employment, what will happen to inflation if there is an increase AD? Use AD & AS schedule to show this | Increase in prices therefore Inflation |
| What is a Inflationary Gap? | When AD exceeds an economys productive potential, there is an inflationary gap, we see rising inflation. But no change in real ouput. |
| What is a deflationary gap? | When there is a unemployment of resources there is said to be a deflationary gap. AD shifts upwards to produce full employment |
| What is stagflation? | Combination of High Inflation and High employment |
| What is the difference between inflation and deflation? | Inflation - increase in price levels Deflation - Fall in Price levels |
| Why is inflation a problem? State two reasons | - Redistritbution of income (decrease real return in lending) - Balance of Payment gets affected (Import & Exports) - Uncertainty of the value oof money and prices (Barter) - Resources cost of changing prices (planning and implementing price change) - Economic Growth and invesments get affected |
| Define what 'CPI' means and explain how it is used | Consumer price index - is based on a chosen basket of items which consumers purchase. A weighting is decided for eah tem according to the average spending on the item by consumers |
| What is RPI and how is it used? | Retail Price Index - measures the percentage changes month by month in the average level of prices of the commoditiies and services including housing costs, purchased by greater majority of households in the UK |
| What does RPIX and RPIY mean? | RPIX- underlying rate of inflation measured as the increase in the RPI excluding mortgage interest payments RPIY - goes further and excludes the effects of sales tax (VAT) |
| What causes inflation? | Demand pull factors, expectations, cost push factors, import cost factors, ecessive growth in money supply |
| What is demand pull inflation? | When demand exceeds supply in the economy |
| What is cost push inflation? | inflation resulting from an increase in the costs of production |
| What is the rate of unemployment? | (number of unemployed/total workforce) x 100%= |
| What are the flows into unemployment? | -Becoming unemployed (redundancies, voluntary quitting from a job, lay offs - People out of labour force. joining unemployment( school leavers, carers, rejoining workforce but have no job yet) |
| What are the flows out of unemployment? | -unemployed people finding jobs - laid of workers being re-employed - unemployed people stopping the search for work |
| State two consequences of unemployment for the economy/organisation | -loss of output - loss of human capital -poorer gets poorer due to inequlaties in distribution of income |
| What is real wage unemployment? | When supply exceeds demand for labour |
| What is frictional unemployment? | Is transitional unemployment due to people moving between jobs |
| What is seasonal unemployment? | Demand for labour varies during different seasons of the year |
| What is structural unemployment? | Changes in the industry leads to people losing their jobs |
| Technological unemployment is what? | When new technologies are employed to do the work of previous employees |
| What is cyclical or demand-deficient unemployment? | unemployment where it is linked to different business cycles |
| State two ways government can create jobs or reduce unemployment? | Spending money on jobs, encourage growth, encourage training in job skills, offer grant assistance to employers, encourage labour mobility |
| What is actual economic growth? | the annual percentage increase in national output. |
| What is potential economic growth? | Is the rate at which the economy would grow if all resources where utilised |
| What two factors determine in the long run the actual growth? | The growth in potential output (Aggregate supply) and growth in AD. |
| What are the causes of growth in potential output? | Increase in amount of resources available, increase in productivity of resources from technological progression or changed labour practices |
| What are the factors for sustainable economic growth? | Investment, Factor in growth, expectations, business confidence |
| What are the advantages and disadvantages of economic growth? | Ads - higher income per head, higher levels of consumption and better living standards, provide better welfare services Disads- depletion of natural resources, environmental hazards & effects such as pollution, rain acid and nuclear waste,can lead to structural unemployment |
| What is Macroeconomics? | It relates to economic growth, inflation, unemployment and the balance of payments |
| What are the four main objectives of an economic policy? | - Higher Economic growth - Price inflation controlled - Low Unemployment - Balance of payments: balance between exports and imports over a period of years |
| State two impacts government tax and spending decisions has on companies | - Expenditure affects suppliers to Gov - " " has a knock on effect in economy - Taxation affect consumer and company spending/investing |
| Why is economic planning important? State two reason | - Governments maintain legal system relating to Business - Gov has responsibility of macro-economic management - Gov raise/lower trade barriers - Govs can subside exports and promote the, Govs can promote inwards investment by foreign countries |
| What is 'Fiscal Policy'? | Is Government policy on taxation, public borrowing and spending. It provides a way of managing Aggregate demand in the economy. |
| What is PSNCR? | Public Sector Net Cash Requirements, this the amount that is borrowed in the fiscal policy if revenues cannot cover expenditures. |
| What two ways can Government using Fiscal Policy stimulate demand economy? What are the implications? | - Spend more, financed by higher taxes/borrowing money. Higher Taxes can lead to reduce spending by private sector in Economy. - Reduce taxation, matched by cuts in Government spending/financed through borrowing Cuts in Gov Spending may not significantly stimulate demand. |
| What is Budget Surplus and Budget Deficit? | Surplus - When Gov income exceed its expenditure, there is a negative PSNCR (Contractionary Policy) Deficit - When Gov expenditure exceeds income, it borrows money to make up difference. Positive PSNCR (expansionary Policy) |
| What are the functions of taxation? Give two examples | Raise revenue for Gov, certain product social costs taken into account, to redistribute income and wealth, protect industries from foreign competition |
| What is Direct Taxes? Give examples | Taxes paid directly to revenue authority, income tax, corp tax, capital gains tax, inheritance tax |
| What is progressive tax? | A direct tax, that takes high proportion of income in tax as income rises |
| What is proportional tax? | A direct tax that takes same proportion of income in tax from all levels of income |
| What is indirect tax? Give examples | Tax collected by revenue authoring from an intermediary such as a supplier. VAT |
| What is specific tax? | Is charged as fixed sum per unit sold |
| What is Ad Valorem Tax? | An indirect tax - is charged as a fixed percentage of the price of the good |
| What is Regressive tax? | An indirect tax, that takes high proportion of a poor person salary then that of a rich persons. TV license, road tax etc |
| What is Monetary Policy? | Government policy on the money supply, the monetary system, interest rates, exchange rates and availability of credit |
| What are the objectives of monetary policy? | Inflation, Balance of trade, full employment and real economic growth |
| What is Quantitative Easing? | Where the Gov prints more money in order to stimulate econnomy, prices raised and incomes, in turn will raise demand for money to be spent |
| What are the effects of using Money supply for the Monetary Policy? | effect on IR erratic, time lag before anything can be done/to measure or see results |
| How is interest rates used to affect Monetary Policy? | Link Between IR and Investment. Link between IR and rate of inflation. Rise in IR will raise the price of borrowing. Higher IR means value of sterling goes up, it reduces import prices and increase price of exports and demand. High IR attract foreign investment and provide capital inflows. Helps balance of payments deficit |
| How is exchange rates used as a target of monetary policy? | Fall in Ex Rates, exports become cheaper, demand for exports higher. Opposite for Imports fall in Ex Rate adds to domestic inflation |
| What is a leading indicator? | one which gives advance indication of what will happen in economy |
| What is Coincident indicator? | One which gives indication of changes in economic conditions at the same time that the changes are occurring |
| What is lagging indicator? | One that lags behind the economic cycle |
| State two monetary indicators | size of money stoc, IR, Ex Rate against another currency, size of gov borrowing, gov borrowing as a % of GDP |
| How can Monetary Policy and Fiscal Policy be used together to increase AD? | - low IR, followed by expenditure in economy - strict credit controls to reduce lending and demand - high IR act as a deterrent of borrowing so reduce spending |
| What is the Balance of Payments? | Check |
| What is Current Account? | Check |
| What is Capital account? | Check |
| What is balance on the financial account? | Check |
| What is a surplus or deficit in current account? Also what are their problems? | Check |
| How can a gov rectify a current account deficit? | Check |
| What is the micro environment? | refers to the immediate operational environment including suppliers, competitors, customer, stakeholders and intermediaries |
| What is the income effect and Substitution effect? | Check - change in income will impact the demand for good/services Sub effect - |
| What are the 5'ms (inputs) in a organization? | Materials, Money, Men, Machines, Management |
| What are the four factors which are required for organizations to function? | People, Objectives, Structure channel and co-ordinate and management. |
| What is customer value proposition? | What the customer gets, for what they pay |
| What is a market? | A market is a where buyers and sellers meet, trade and agree a price for goods and services |
| What are firms and households? | Firms - Suppliers or potential suppliers in economics Households - Potential buyers known as consumers |
| What is derived demand? | To make good A for households, firms and govs need to use good B, which demand is said to be derived demand. |
| What is utility? | The pleasure/benefit or satisfaction from the consumption of a good or service |
| What is total utility? | Total Utility is the total satisfaction or benefit from consumption or spending on goods/services for people. |
| What is Marginal Utility? | The satisfaction gained from the consumption of one additional unit of good. |
| What assumptions are made about consumer rationality? | -consumers prefer more goods to less - Consumers willing to change to substitute goods if price is right - Choices are transitive, Good A is preferred to Good B, Good B is Preferred to Good C. Then Good A is preferred to Good C. |
| What is Demand? | Demand is the quantity of good/service consumers wish to buy or willing to buy |
| Changes of price is represented as shifts or movements along the demand curve? | Movements along demand curve |
| What is a demand curve? | Total quantity of a product that all purchases would want to buy at each price level. Sum of all individual demand curves. |
| What factors deterine total market demand for a good? | Price of Good, Household Income, Price of other subs, tastes, fashion, expectations and distribution of income in households. |
| What is Income effect and Substitution effect? | IE - the income effect is the change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service, as income increases so does demand for quantity goods SE - idea that as prices rise (or incomes decrease) consumers will replace more expensive items with less costly alternatives |
| What are substitutes and complements? | Check |
| What is price elasticity of demand? What is the formula? | Price elasticity of demand measures the responsiveness of demand after a change in price. %change in QD/%change in price |
| If Price Elasticity of Demand is greater than 1 is it elastic or inelastic? If Price Elasticity of Demand is less that 1 is it elastic or inelastic? If Price Elasticity of Demand is 0 is it elastic or inelastic? | Demand >1 = Elastic Demand < 1 = Inelastic Demand is 0, no relationship to price and quantity demand of product |
| What is Income elasticity of demand? | measures the responsiveness of demand for a good to changes in income |
| What is Income elasticity of demand formula? | %Change in QD/%Change in Income |
| If income elasticity for a good is greater than 1 is it elastic or inelastic? If income elasticity for a good is between (0-1) is it elastic or inelastic? | Income elastic > greater 1 Income inelastic 0-1 |
| What are normal goods, Luxury Goods and inferior goods? What are their income elasticity? What are thier vaalues? Give examples | Inferior - negative elasticty, -ve, bus travel Neccssity - Inelastic, (0-1), Basic food Luxury - elastic, greater than 1, Yachts etc |
| What is cross elasticity of demand? | measures the responsiveness of QD for one good following change in price for another good. %change QD Good A/% Change Price of Good B |
| Match these cross elasticity for perfect complements, complements, unrelated, perfect substitutes and substitutes to the values below. -1, Positive, 0, negative, +1 | PC=-1 C=negative unrelated=0 sub=Positive PS=+1 |
| What causes a shift in demand curve? State two examples | -rise in household income - subs and comps -Changes in taste, expectations, fashion, increase in population |
| What is supply? | The quantity which suppliers are willing to produce for a give price |
| What is cost plus pricing? | Check |
| What are the shifts in supply curve? State two | Costs of factors of production, a fall in price of other goods, technological progress, improvements in production |
| What is the difference between SS and LS? Use drawins to illustrate this | check |
| What Consumer demand and producer surplus? Use diagram to illustrate | CS=price consumers prepared to pay for a good compared to what they pay PS= Price supplies willing to supply goods compared to what they supply |
| Explain why are maximum and minimum prices used? Use diagram to illustrate this. What effect do they have on demand and supply? Give examples where it is used | check |
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