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iGCSE Economics (Market system (determinants of demand (Fashion and tastes…

- - - - Government porduces
        
        Communist econimies
    - - Only private firms
    - - Private and public
        
        Most modern economies
  - - - market clearing price
    - - Total revenue= TR =PxQ
  - - - Availability of substitutes
      - Degree of necessity
      - Proportion of income spent on product
      - Time period
  - - - Ease Of Entry Into The Market
      - Stock Levels
      - Production Speed
      - Spare Capacity
  - - - Degree of necessity
        
        Is the product a necessity or luxury?
  - - - Predict revenue based on a price change
      - Plan future production levels
  - - - Reduces poverty
      - Can cause unemployment
      - Firms Can Switch To Capital
      - 7.25 an hour in the USA
      - Benefits disadvantaged workers
    - - Depends on strength
      - Dependent on quantity of workers
      - Firms can switch to capital
      - Negotiate pay and working conditions
      - Put pressure on governments to pass legislation that improves the rights of workers
  - - - Infinite wants>finite resources
      - What to produce?
      - How to produce?
      - For whom to produce to?
    - - Benefit lost from the next best alternative
    - - Shift to right=economic growth
      - Shift to left=Shrinking economy
      - Different combinations of two goods an economy can produce if all resources are used up
- - - - Natural resources
      - Where businesses locate
    - - Workforce in the economy
        
        Manual workers
        
        Skilled workers
        
        Managers
    - - Used in production of goods
        
        Working capital
        
        stocks of raw materials and goods
        
        Fixed capital
        
        Factories
        
        Shops
        
        Equipment
    - - Entreprenuers
        
        set up and run business
        
        Their roles
        
        Owners: responisble for business and upkeep
        
        Business ideas: new, adapted or copied
        
        Organizers: organize other factors and make decisions
        
        Risk-Takers: risk losing money put in
  - - - Infrastucture
      - Skilled labour
      - Cooperation
      - Ancillary services
    - - Marketing
        
        Large firms can afford e.g. its own delivery company
      - Manegerial
        
        Larger firms can afford more specific managers and/or general managers
      - Purchasing
        
        Buying larger quantities at cheaper rates per product
      - Risk bearing
        
        Larger firms can afford to take larger product risks
      - Financial
        
        Larger firms have a bigger variety in sources of income
      - Technical
        
        Larger production plants are more efficient than small ones
    - - Labour relations
      - Administration
      - Coordination and control
  - - - Produce more/less of capital and consumer goods w/resources
    - - Fertilisers
      - Irigation
      - Flooded land drained and then used
      - GM Crops and disease resistant
    - - Total output/No. of workers
      - Improving it
        
        Education and training
        
        Improve motivation
        
        Improving working practices
    - - Primary Sector
        
        Agricultural machinery, fertilsiers, tracking livestock
      - Secondary sector
        
        Robots, computer contolled machine.
      - Tertiary sector
        
        Online shopping, advances in medicine and surgical technology
  - - - extracting raw materials
        
        Mining
        
        Fishing
        
        Forestry
    - - Converting resources into goods
        
        manufacturing
        
        Processing
        
        Construction
    - - Services
        
        Taxis
        
        Tourism
        
        Accountancy
  - - - the dominant firms are so large they exploit economies of scale and enjoy lower costs.
    - - prices stay the same for lengthly periods of time because firms fear price wars.
    - - impacts others in market.
    - - collusion about price.
        
        firms fix prices
        
        consumers will pay more
      - too much money spent
        
        advertising, promotion.
    - - Economies of scale
        
        costs will be lower
        
        lower prices for consumers.
      - price stability
        
        certainty
      - choice
        
        launching new brands, good for consumer.
  - - - reduce unemployment
      - reduce congestion
      - improve income inequality
      - influencing the location of firms
        
        money for training
        
        government investment in infrastructure
        
        employment subsidies
        
        employment subsidies
  - - - Can be efficient
      - Price Makers
      - Bad customer service
      - Innovation of new products
      - (Possibly) More research/development
  - - - Gas prices fell
      - Electricity prices fell
      - Water prices rose
    - - Less Workers
      - Higher Productivity
    - - More Profit
      - More Mergers
      - More Investment
    - - More revenue
      - More focus on business of government
      - TV advertising at taxpayer's expense
    - - More competition
        
        More efficient
        
        Reduced costs
      - Private Monopolies
- - - - More choice
      - More competition
      - More growth
  - - - Increased incomes
      - More exports
      - More employment
      - Disadvantages
    - - Lower prices
      - More employment
      - More choice
      - Disadvantages
  - - - Quotas
        
        Restricting the amount of a good imported into a country. For example cars.
        
        Easy to implement
        
        Restrict Supply
        
        Raise price
    - - Make imports more expensive, like clothes, more expensive to increase local goods market competitiveness.
      - Shift Supply to the left
    - - Insisting imported goods meet strict regulations. For example toys from the far east must meet certain health and safety requirements
      - Example: toys from the far east must meet certain health and safety requirements
    - - Subsiding a locally produced good, like electronics, to improve competitiveness with imported goods.
      - Easy to implement
      - Restrict Supply
      - Raise price
  - - - Free trade between members
      - Invites FDI
      - Co-operation/Peace
    - - limits global free trade
      - more taxes to pay
      - breaking existing trade links
      - trade diversion
        
        UK NZ following membership of EU
  - - - Administering/Monitoring the WTO's rules for trade
      - Reducing/Eliminating trade barriers
      - Monitoring /Reviewing trade policies of members
      - Settling trade disputes
  - - - intrest rates
      - the demand for exports
      - inward FDI
    - - demand for imports
      - outward FDI
      - interest rates in other countries
  - - - Helps Healthcare
      - Help Productivity Longterm
      - Helps Education
    - - Money Spent Incorrectly
        
        White Elephant Projects
        
        Corrupt Government Takes Money
- - - - Increase government expenditure and Decrease Taxes
      - Used to recover from a recession
      - Used to reduce Unemployment
      - Positive: Due to rise in demand; firms will accept more workers
      - Negative: Possibly create inflation as aggregate demand raise to quickly. May cause demand - pull inflation (too much demand in the economy)
    - - Used to decrease government speeding
      - Can be used when the economy is in boom
      - Increases Taxation Levels
      - reduces inflation
      - reduces current account deficit
      - Unemployment can occur
  - - - Reduces unemployment
      - Helps out recession
      - Lower interest rates and growing money supply
      - encourage more investment and increase overall demand
    - - Reduces inflation
      - Reduces current account deficit
      - Increase in interest rates
        
        More saving
        
        Dampens demand in a economy
    - - more borrowing when interest falls, mortgage payments falllow interest rates fall so loans pay less interest which lowers coast and more profit
  - - - Measured: GDP
        
        Gross Domestic Product
        
        Limitations to GDP as a measure of growth
        
        Inflation, population changes, statistical errors, the value of home produced goods, hidden economy, living standards
      - Benefits
        
        Increase Incomes
        
        More Leisure Time
        
        Increased Disposable income
        
        Better public services
        
        Greater Life Expectancy
        
        Improved Medical Care: Equipment and Surgery
      - Problems
        
        Regional Differences
        
        Environmental Damages
    - - Consequences of Inflation
        
        Increased government spending
        
        Balance of payments affected
        
        Reduces value of savings
        
        Reduces purchasing power
        
        Increases business costs
        
        Shoe leather costs
        
        Menu costs
        
        Redundant machinery
        
        Market competetiveness
    - - Methods
        
        Government regulation
        
        Environment Agencies
        
        Taxation & Subsidies
        
        Permits
        
        Road Charging & Prices
    - - Consequences Of Unemployment
        
        Low self esteem
        
        Redundancy money to pay
        
        Spare capacity in firms
        
        Family Break Ups
        
        Higher Crime
    - - Current Account deficit
        
        Imports greater than Exports
        
        High external debt
        
        Unemployment
        
        Weak exchange rate
        
        Structural Weaknesses
      - Current Account Surplus
        
        Exports greater than imports
        
        Employment
        
        Economic Growth
        
        Domestic Shortages
        
        Rising exchange rate
        
        International instability