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ECONOMICS (QUESTIONS COMMONLY ASKED (How much will I earn?, What should I…
ECONOMICS
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SIX KEY CONCEPTS
SCARCITY
Scarcity is the economic problem of having unlimited needs and wants but limited resources available
MAKING CHOICES
Making choices is an important part of economics. As consumers, we make choices about what to buy to satisfy our needs and wants
SPECIALISATION & TRADE
Many countries around the world are unable to produce the variety of goods and services require to support the wants and needs of there populations.
INTERDEPENDENCE
Interdependence refers to the way we rely on others to satisfy our wants and needs. participants in our economy, including producers, consumers, business and the government, depends on each other to produce, specialise and consume goods and services.
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WHAT IS ECONOMICS?
Is a branch of social science that studies the production, distribution and consumption of goods and services
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ALLOCATION OF RESOURCES
- How we divide resources and how these resources are then distributed to consumers
What a business is able to produce, how they are able to produce it and how much they can sell it for
WHAT TO PRODUCE
Some businesses might seek to make a profit by distributing a resources that is in high demand, but low supply 'GAP IN THE MARKET'
HOW TO PRODUCE
When producing goods or services, business will try to keep their costs as low as possible so they will make more profit
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TYPES OF BUSINESSES
SOLE TRANDERS
Sole traders, also known as proprietors, are individuals who run their own businesses. While they can employ other people to work for them, sole traders are completely responsible for the success or failure of the business. This means that the owner might find themselves having to sell their personal assets such as their car or home to pay off the debts of their business if it fails. Proprietorships are the most common legal business structure in Australia and are favoured by most small business owners since they are cheap and easy to set up.
PARTNERSHIPS
Partnerships are formed when two or more people agree to run a business together. The details of what each partner is responsible for and entitled to are often specified in a partnership agreement. Partnerships help the owners share the responsibility of running a business while utilising the skills, effort and finances of the different partners. Partnerships are cheaper to set up and run than companies, but partners can be held accountable for the failures of the business and any bad decisions made by other partners on behalf of the business.
CORPORATIONS
Corporations, also known as companies, are businesses that are considered separate legal entities to their owners. Companies are more expensive and tricky to set up and maintain than proprietorships or partnerships, but they protect the owner(s) by providing them with limited liability. This means that if the company fails, the owner will not be forced to sell their personal assets to pay the debts of the company in most circumstances. The owners of a company are called shareholders since they own a share of the company and are entitled to that portion of the company’s profits.
COOPERATIONS
A cooperative is a business made up of at least five members who contribute to the running of the business, all of which have equal voting rights regardless of their position in the business. Although not very common, cooperatives are becoming increasingly popular and successful as they make each member feel valued as equals, regardless of their position or title within the cooperative.
FRANCHISES
A franchise agreement allows a person (franchisee) to use the name, products and services of an existing business (franchisor), in return for franchise fees and a portion of the profits. Franchises are popular as they allow the franchisee to use a proven business model that is less likely to fail. The franchisee must follow the guidelines set by the franchisor as to how to run certain aspects of the business, but can often rely on the franchisor for some support.
PUBLIC GOODS & SERVICES
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WELFARE
o Welfare is a government program which provides financial aid to individuals or groups who cannot support themselves
ARTIFICIAL INTELLIGENCE
• Artificial intelligence (AI) is more than just an imaginative creation of science fiction movies. AI gives machines and robots the ability to think and act more like humans. Robots with AI have been quite common in factories and warehouses for many years, and are now even demonstrating the ability to do highly professional tasks such as analysing data, generating reports and even diagnosing patients. While robots have the potential to improve our living standards and create new industries, a study by the McKinsey Global Institute predicted that, by 2025, robots could jeopardise between 40 million and 75 million jobs worldwide.
