YEAR 10 Economics and Business
Key Concepts
Scarcity
Making Choices
Specialisation and Trade
Allocation and Markets
Interdependence
Unlimited needs and wants, limited resources available
Split into four categories
Land
Labour
Capital
Entrepreneurship
Natural resources
Coal, water, trees
Manufactured resources
equipment, machinery
Human resources
Teacher, Doctor, Police
Management resources and skills
Talents required to bring resources together
Economic performance and living standards
The way we distribute scarce resources
Market
Exchange of goods and services amongst buyers and sellers
Rely on price in order to determine how much we can produce and consume
When cost of producing or obtaining is high, not everyone can obtain
way an individual, business or entire country focuses on production goods and services to develop more efficient process
specialisation allows a country to become more efficient over time and take advantage of economies of scale
To make a good economic decision, must consider our options
follow economic decisions:
Financial choices (such as how much money to save or spend)
Business decisions (such as what to produce and where to sell it)
Employment decisions (such as what career path to follow)
Legal decisions (such as whether to take legality for faulty product)
Refer to the way we rely on others to satisfy our needs and wants
economics measure how well our economy is doing (economic performance) using a variety of ways
Gross domestic product (GPD)
Inflation
Unemployment rate
Economics also measure living standards
Material living standards refer to out access to physical gods and services
Non-material living standards include things that contribute to our happiness, such as freedom and low crime levels
Measuring economic performance
Gross Domestic Product (GDP)
Unemployment
Fall in economic growth:
Total value of goods and services produced in a country over a year
Economists hope to see an economic growth of 2% per year
Economic growth is important because:
More goods and services are being produced
More people are being employed and being paid wages
People can spend on a wider range of goods and services to improve living standards
Types:
Structural
Seasonal
unemployment
types
how to reduce unemployment
impacts
social
economic
political
Factors that influence a consumer's decision to buy
price
living standards
examples (infographic)
refers to all those people who are able and willing to work but cannot find a job
Unemployment rate
Labour force
refers to the proportion of the labour force who do not have a job
refers to all the eligible worker. Everyone who has a job plus those who are looking for one
Structural
Cyclical
Frictional
Seasonal
Hard-core
Refers to the time spent waiting for a new job
period between finishing one job and starting another
usually voluntary and of the shortest duration
loss of jobs resulting from mismatch of skills or machines replacing labour
example: automatic teller machines, self-serve outlets
Also known as demand deficient unemployment
It is common during a recession phase (now)
During wear economic growth, consumers are not buying as many goods and services
firms/businesses respond by cutting down production and firing workers
occupations that are offered at particular times of the year
Examples: fruit pickers, skiing resorts, sheep shearing
those regarded as being virtually unemployed
may be chronically ill, have a disability, unskilled, unqualified, inexperienced or disinterested
Measuring unemployment
Unemployment rate =
Number of unemployed / Labour force times by 100
Unemployment rate will never be 0 as people are always changing jobs and machines will always replace labour. Anything 5-6% is generally acceptable
Australia’s unemployment rate is 7.4% (5.3% in 2019)
mental health issues
affect poorly on state and federal governments
low living standards
loss of self-esteem and confidence
increase in crime and drug abuse
leads to less faith in current government
loss of output: production of goods and services
loss of government revenue
high reliance on government reliance
increase government expenditure - welfare
Government uptake new projects such as the construction of Elizabeth Quay or the stadium at Burswood
Government proving job training and apprenticeship opportunities
Raising the compulsory age of school attendance so that students can improve on their qualification
Cutting down benefits to the unemployed so that they make an effort to find a job
Frictional
Hard-core
Cyclical
Rescession
when economic growth falls for two or more quarter (6 months)
Depression
classed as an extreme recession lasting two or more years
Inflation
when there is an increase in the general level of prices paid for goods and services over a certain period
Rising prices means consumer must pay more for goods and services if they want to continue to maintain their standards of living
Reasons:
stronger demand in the economy for goods and services
Stronger demand can lead to shortages of goods and services therefore increase prices
possibly meaning:
Consumers feeling confident about their future income and employment
Businesses feeling confident about their future
Trading partners such as china performing well increase sport demands
Benefits
Who does?
Who doesn't?
high income earners
importers
borrowers
low - middle income earners
bank savers
exporters
Measured in two ways:
non-material
material
measured by the quantity of goods and services available each year as measured by GPD
Material living standards refers to our access to physical goods and services
cannot be measured in dollar terms, and are intangible
Examples: freedom of speech, low crime levels, discrimination, preservation of environmental
Netherlands
Afghanistan
The OECD better life index
(Organisation for economic cooperation and development better life index)
Includes material and non-material living standards to assess overall wellbeing
Seeks to provide the true living standard if 40 different countries by measuring progress based on II criteria
$45 484 average income per capita
Literacy rates (15 and over) 99%
Life expectancy 81 years of age
GDP – $1.3 trillion
$664 average income per capita
Literacy rate 55.17%
Life expectancy 64 years of age
GDP - $26 billion
availability of credit
marketing
age and gender of consumers
ethical and environmental consideration
convenience
Not all consumers are interested in the lowest price for an item
sometimes associated with the quality of the product
If prices are too low, consumers become suspicious of its quality
A company’s marketing methods can influence a consumer’s decision to buy
Conveys the value of a good or service
Credit is an agreement where money is lent to a borrower and must be repaid at a later date
Availability refers to how easily it is to borrow
Spending too much on a credit card can lead to debt that is difficult to repay
As we age, we have different needs
Marketers may specifically target men or women to buy their product
items that save the consumer time are easier to use and are often preferred
example: ready-made meals have experienced a 4% annual growth over the last five years with revenue from the ready-made meal sector worth around $900 million each year in Australia
ethics are standards that provide guidance on what is considered right and wrong
many consumers wish to purchase products that have been produces in a way that is consistent with their beliefs
issues to take into consideration:
Animal rights (testing, cruelty)
the environment (pollution, recycling, deforestation)
Article analysis
Main issue
Current impacts
Possibly Future impacts
Bushfires
COVID-19
Drought
over 450 deaths (417 smoke inhalation)
18.626 million hectares (46.03 million acres) was burnt
caused unprecedented bushfire season
disruptions to transport --> shortages in supply
panic buying
shortage in supply --> prices rise
general prices rose 2.2% --> biggest rise in five and a half years
shortages of supply across Australia, many prices rose
Food and beverage prices increased by 1.9% in the March quarter
vegetables jumped to a 9.1% rise
prices of fruit climbed 2.4%
panic buying due to COVID scare
household products such as toilet paper rose 3.4%
rice and pasta rose 4.4%
hand sanitiser and soap rose 2.2%
During this time, unemployment rose 0.1%, reaching 7.4%
Deflation
Inflation
refers to the reduction of the general level of prices in an economy
prices are expected to fall by 0.5% in the second quarter
annual inflation rate said to reach -1%
refers to the increase of the general level of prices in an economy
anticipated to be a big rose on consumer price index (CPI)
Policies to improve living standards
macroeconomic policies
microeconomic policies
budgetary
monetary
adjusts spending and tax rates
manages budget of Australia
lowers tax to give consumer a more disposable income
management of supply and interest rates
controls inflation, consumption and growth
lower interest rate
reduces cost of borrowing which encourages investment and consumer spending
trade liberation
deregulation
a policy that lifts certain restrictions
lowers prices for consmuers
increases competition
a policy that removes certain government rules
increase economic freedom
opens new markets
more consumer spending
policies made by the government that affect the whole nation
policies made by the government that only affect certain industries and markets. they focus on promoting competition, productivity and efficiency
wealth and income
Wealth measures the value of all the assets of worth owned by a person
Income is the money received for work or through investments
distribution in Australia:
Highest group received over 40% of income
Lowest group received 7.3% of income
Distribution of wealth is unequal
Top 20% owning 62% of wealth
Lowest 20% owning less than 1% of total household wealth