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Economics and Business - Steven Simorangkir - Coggle Diagram
Economics and Business - Steven Simorangkir
6 Key Concepts
Specialisation and Trade
Specialisation refers to the way an individual, business, or entire country can focus on the production of a particular good or service in order to develop a more efficient and competitive production process
Trade is the ability to import or export goods or resources to or from another country
Interdependence
Interdependence refers to the way we rely on others to satisfy our wants and needs. Participants in our economy, including producers, consumers, businesses and the government, depend on each other to produce, specialise and consume goods and services
Making Choices
These decisions can be small such as what we will buy for lunch or big, such as whether or not to buy a house
as consumers, we make choices about what we want to buy to satisfy our needs and wants.
Allocation and Markets
The way scarce resources are distributed among producers, and how scarce goods and services are divided among customers
Scarcity
In many places in the world, water is a scarce resource
Scarcity is the economic problem of having unlimited wants and needs, but limited resources available.
Economic Performance and Living Standards
How well an economy is performing and the level of wealth, material goods, comfort and life necessities available to people living in a geographical area
Supply and Demand
Demand
The amount that consumers will buy at a given price
Equilibrium price
The price at which demand and supply balance each other out
Supply
The amount producers are willing to make
Price mechanism
the way price can affect the supply and demand of goods and services
Goods and Services
Goods
Items that satisfy human wants and provide utility. Goods are tangible
Examples: food and laptop
Services
A transaction in which no physical goods are transferred from the seller to the buyer. Services are provided by other people
Examples: Netflix and Football player
Types of markets
Housing market
Tenants pay rent to landlords for access to shelter
Mortgage is a loan most people get from a bank in order to afford a home
Houses are bought and sold
Stock market
Shares - a partial ownership in a company
Owning a share earns you come of the profits from that company
Where people can buy and sell shares
Labour market
Workers sell their time and skills to employers
Employers pay workers a wage
Foreign exchange
People may need foreign money to spend in that country
Or people might trade their currency if they believe the price will change
Buying and selling currencies from other countries
Needs and Wants
Needs
A need is something essential for survival
Examples: food and water
Want
A want is something that is desired but not needed for survival
Examples: PS5 and Phone
Types of Businesses
Partnership
Partnerships are formed when two or more people agree to run a business together
Corporations
Corporations are also known as companies, are businesses that are considered separate legal entities.
Sole trader
Individuals who run their own business
Franchise
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
Cooperatives
Cooperatives 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
Factors of Production
Labour
Employers that a business needs to produce, develop and sell goods or services
Capital
Money; items that help make things
Land
Natural resources that a business uses
Enterprise
The ability to combine land labour and capital to make a profitable business