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Term 3 Economics and business - Coggle Diagram
Term 3 Economics and business
Key Concepts
Scarcity
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The economic problem of needs and wants
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Limited resources
Not always enough resource to for fill everyone's wants/needs
Opportunity Cost
When you want to buy two or more things but do not have the resources (money) to do so. The thing you can not purchase is the opportunity cost
Making choices
Choices must be made by everyone; consumers, producers and businesses alike to be able to have a stable economy
Consumer choices may be;
What to buy?
How far am I willing to go for 'this product'?
Is it affordable?
Producer choices may be;
Where to produce?
What to produce?
What is the earning compared to the manufacturing cost?
The Economic Questions
Who to produce for?
Businesses need to know target market
Target market could be based off of;
Age
Sex / Gender
Nationality
Pay rates
Location
Hobbies
The target market could be directly consumers or for a middle man
E.x. Places like Big W or K-mart are the middle man
What to produce?
Services or goods?
Are the resources needed to produce the product available?
If not, can they be imported in affordably?
Will the product be wanted in your location?
How to produce?
Make sure resources are properly managed
Have enticing prices that also earn a profit high enough to keep business going
Specialization and trade
Some countries rely on trade and the ability to import and export in order to for fill the demands of that country
Interdependence
The way we rely on others to satisfy our own needs and wants
Producers, consumers, businesses and the government depend on each other
Rely on each other to provide something
We rely on others to help fill the gap in our own needs and and wants which we can not provide for ourselves
Allocation and markets
The way we distribute resources among producers and manufactures
How producers distribute goods and services between consumers
Economic performance and living standards
Gross Domestic Product (GDP)
The total value of services and goods that are produced, in a country, annually
Inflation
The increase in prices for products
Unemployment rates
The percentage of people who CAN work but are not
Economists measure living standards
Needs and Wants
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Needs
Things that are necessary for our survival
Examples
Food
Water
Clothes
Shelter
Health care
Wants
Things that we demand to have but do not need to survive
Examples
Phones
Games
Books
Decor
Wi-Fi
Factors of production
Land
Natural resources
Coal
Water
Labour
Human resources
Workers
Helpers
Capital
Manufactured resources
Equipment
Entrepreneurship
Management Resources
Skills
Talents
Scams
Types of Scams
Emotional
Charity
The target for this type of scam is people who are kind hearted
When scammers pretend to be a genuine charity and takes advantage of someone's generosity
Physic
The target for this type of scam is people who need clarity or are vulnerable
When a scammer offers a 'luck charm' to a victim for money so the victim can avoid a 'near tragic event' which may happen to them if they do not purchase the 'luck charm'
Romance
The target for this type of scam is people who are "desperate" for love / attention
When a scammer takes advantage of someone looking for romance
Emotional scams are scams which use your emotions for their own personal gain, which is normally to get your money.
Investment
Phishing
The target for this type of scam is people who are not very tech savvy, are gullible, or people who overlook the fact things don't make sense
When a scammer sends many emails pretending to be on behalf of your bank asking for account details
Investment
The target for this type of scam is people who are looking to get money and fast
When a scammer phones a victim and pretends to be apart of your bank, informing you there is an issue with your account and asks for detail and/or passwords
Skimmer
The target for this type of scam is anyone who uses credit cards
When someone illegally copies and clones the information of an atm's magnetic strip to gain credit card details
Investment scams are scams which offer an individual 'the offer of a life time' in exchange for a donation 'to show they're willingness'
What is it
Scams are a form of trickery in which a person takes an individual's money or personal information to illegally use for their own personal benefits.
How to avoid being scammed
Be suspicious
When receiving emails look out for spelling, grammar and punctuation errors
Look out for guilt trippers
Pick out signs of dishonesty
Be cautious
Don't offer strangers money of any kind
Don't give your credit card or bank details to strangers
Be patient
Don't be pressured into quickly making a choice
Scammers use a timed tactic to make you feel like you need to answer now, meaning you think it through less
If there's anyone else around get a second opinion
Be alert
Often check bank and card statements for unexpected transactions
Be wise
Have an understanding of the little chance of getting rich, and quickly, from business schemes.
If it seems to good to be true then question it.
A.C.C.C.
The Australian Competition and Consumer Commission
The A.C.C.C. is an organization which runs the Australian SCAMwatch
If you have been scammed you should report to the Australian SCAMwatch
Globalization
All the countries of the world are linked and should be seen as one large economy
Trade
The import and export of goods and services
Foreign Direct Investment
Establishing new or existing businesses in Australia with foreign money
International Labour
People work overseas in other countries and people from other countries come to work in your country
Technology
Allows us to communicate with potential customers all over the world quickly and efficiently
Immigration
Settlers are crucial to an economy's success and have had to adapt to the changing businesses
Businesses tend to outsource their product manufacturing because of the cheap prices and amount of people who are willing to work
Economic Systems
Capitalist
Beliefs
Resources should be own privately
Resources such as;
Natural
Labour
Capital
The only reason to make/provide products is for profit
Karl Marx, an author who wrote 'The Communist Manifesto' and 'Das Kapotal' made observations that due to the workers in a capital system being exploited they would eventually riot
This would lead to a classless society
Market Capitalist
Producers exchange goods and services for money
Takes place in 'the market' (May or may not a be a literal space)
'What to produce?'
What consumers will buy
What they're willing to pay for
"How to produce?"
The most cost-effective method
'Who to produce for?'
Whoever has the money to purchase the products
Most of the productive resources are owned by individuals and firms
Most countries are a market capitalist
The following countries have a market economy;
Australia
United States
Germany
France
UK
Malaysia
Japan
Planned Capitalist
Productive resources are owned by individuals and firms
The government decides the answers to all the economic questions
Socalist
Beliefs
Resources should be owned by the government, or the state, on behalf of the people
Market Socialist
Economic questions answered similarly to 'market capitalist'
Government owns productive resources
The former 'Socialist Federal republic of Yugoslavia' considered to have a market socialist economy
Planned Socialist
The government decides the economic questions
Production takes place inline with the governments long and short term plans
Producing goods and services may not emphasize on consumers
The government will focus on what they consider to be important to produce
As a result shortages of consumer goods occur
North Korea is an example of a Planned Social Economy
Traditional/Subsistence
Beliefs
Money does not need to be used
Self sufficient
Produces enough to survive
Only produces for you and your family/close friends
'What to produce?'
Depends on the resources available, and the skills you need to acquire them
Resources can be gathered through;
Hunting
Traps
Fishing
Long distance weaponry
Gathering
Knowledge
What is edible?
What is poisonous?
Growing food
'How to produce?'
Depends on custom and religious beliefs
Innovation
The change of an existing product to make it more effective than before
In Marketing
Conveying the value of the goods and services to a customer
Different marketing techniques
Positioning
Creates a distinct image for the brand or company
People viewing the product as 'brand new'
Consumers like unique products
More successful to produce what the people want
Meet the consumers needs better than others in the market
Not all consumers have same needs and wants so marketers must group consumers who have common needs and wants
This is called segmentation
For example all consumers eat but what we eat is affected by different lifestyle choices
Easier to reach out to these individuals when grouped
E.x. Older people are targeted to buy funeral insurance
Consumers buying habits tend to be influenced by;
Geographical Market Segment
Where consumer comes from
Nation
State
Region
Demographic Market Segment
Age
Gender
Income
Ethnicity
Religion
Behavioral Market Segment
Knowledge of product
How often the consumer will use product
Lifestyle Segment
How they spend leisure time
Attitudes
Opinions