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Economics & Business Key Concepts - Coggle Diagram
Economics & Business
Key Concepts
Key Concepts
Interdependence
Interdependence refers to the way we rely on others to satisfy our needs and wants.
Allocation and Markets
Allocation refers to the way we distribute our scare resources among producers and consumers and consumers.
Economic performance and living standards
Economists measure how an economy is doing.
Some key indicators of economic performance include:
Gross Domestics Production (GDP)
Inflation
Unemployment Rate
Specialisation & Trade
Specialisation refers to the way an individual, business, or entire country cab focus on the production of a particular good or service in order to develop more efficient and competitive production process.
Scarcity
Scarcity is the economic problem of having unlimited needs and and wants, but limited recourses available.
4 categories of Recourses
Land
Labour
Capital equipment
Entrepreneurship
Making Choices
In order to make good economic decision, we must consider our option.
Economic Decisions:
Financial choices
Business decisions
Employment decisions
Legal decisions
Needs and Wants
Needs - it's something you need to survive e.g. shelter, water, food
Wants - it's something you don't need to survive e.g. iPhone
Opportunity Cost
Opportunity Cost is the real or economic cost of a decision. It is the value of the best alternative that you give up
Markets
Labour Markets
Where workers sell skills, knowledge and effort to employees
Stock Markets
Where shares are bought and sold
Housing Markets
Where houses are bought and sold for income
Circular Flow Model
Household Sector:
Refers to the individuals or consumers who work for businesses
They provide labour, in return they receive an income
Individuals then use this money to buy goods and services
This way money keeps flowing through the economy
Business Sector:
Refers to the producers that are responsible for making and selling goods and services
Business sell goods and services to make a profit
They need the labour recourses provided by workers
Factors of production
Land - refers to resources that the land produces e.g. soil
Labour - refers to human resources (goods & services) provided by human. e.g. farmer
Capital - refers to resources used to help make goods and services e.g. machines, tools
Enterprise - refers to the ability to organise the resources land, labour and capital. e.g. Coles
Supply and demand
Buyer and sellers are heavily influenced by price
Prices can be influenced by many factors (market sources) such as:
Availability of product
Popularity of the product
State of the economy
Law of supply
Law of supply is when the higher the price of a product, the higher the quantity that the supplier will produce
Law of demand
Law of demand is where a larger quantity that the supplier will want to produce
Equilibrium
Equilibrium is the point at which buyers and sellers ''meet''.
Types of business
Partnership
Two or more people own the business.
Positive
Increase your lease of knowledge, expertise, and resources available to make better products and reach a greater audience.
Negative
Unlimited liability, profit is shared between the partners, partners may not always agree on decisions for the business
Corporation
A legal entity that's separate from its owners.
Positive
Advantages of a corporation include personal liability protection, business security and continuity, and easier access to capital.
Negative
Disadvantages of a corporation include it being time-consuming and subject to double taxation, as well as having rigid formalities and protocols to follow.
Sole Trader
A sole trader is a self-employed person who owns and runs their business as an individual.
Positive
Get started immediately. As a sole trader, you don't need to register your business with Companies House, simple registration, fewer tax responsibilities, etc.
Negative
liable for any debts of the business.
Franchise
Franchising is a business model where one company (the franchisor) owns a brand and offers a license to others (franchisees) so they can sell the products or services under that brand for a defined period of time.
Positive
Franchises have a higher rate of success than start-up businesses.
Negative
Loss of control, compliance costs and risk, poorly performing franchise, etc
Business opportunities and influenced
Location
Its where a business selling their product or service
Target Market
Its what type of customers the business is targeting for e.g.
Gender, age, income level, race, education, religion, marital status, and geographic location
Demographics
Demographics refers to the description or distribution of characteristics of some target audience, customer base, or population.
Consumer rights and Responsibilities
Socially responsible business and consumer
