| Economy/Economic Activity | Includes production of physical goods and services |
| 3 Resources of production | -Natural resources
-Capital resources
-Labour resources |
| Natural Resource | natural resources used to provide good/service.
eg: inland water, ocean, forests |
| Capital resources | -Building, machinery, equipment, vehicles & technology items used in production of final goods and services
-eg: crane, phone, lifting machine. |
| Labour resources | Mental and physical efforts of people in production process.
-eg: delivery, healthcare workers, nursing home carers |
| Basic Economic Problem/ Economic Scarcity | Scarcity restricts living standards of a nation.
There is limited resources available for production , and people have unlimited needs and wants. |
| Who chooses what goods & services will be produced with limited resources available? | The government, the businesses, the consumers. |
| Opportunity Cost | The value forgone/lost when resources are used for one purpose, instead of the next best alternative. (2nd best option) |
| Cost Benefit Analysis | Deciding what to make with limited resources. Involves detailed lists of costs and benefits of each proposal. |
| Market | A place where buyers and seller interact, exchange of goods take place (at agreed price). |
| Commodity Market | Where unprocessed/primary products are sold. (eg. wool, wheat, minerals.) |
| The Types of Markets | Commodity Market, labour market, currency market, share market, livestock market, financial market, black market, education market, property market... |
| Black Market | The selling and purchasing of illegal products. eg: drugs, weapons, stolen items. Big impact on Australian economy and deprives copyright owners of receiving full return on benefits they provide to users of their products. |
| The 4 main market structures: | 1. Perfect Competition
2. Monopolistic Comptition
3. Monopoly
4. Oligopoly |
| Market power | Ability in a market structure to control or manipulate prices or quantities in the market. |
| Perfect Market | Lots of buyers and sellers.
No product differentiation (same).
No barriers preventing new businesses from entering OR leaving market.
Buyers and sellers have perfect knowledge about the products.
eg: Queen Market is a close ex. |
| Monopolistic Competition | Many sellers and buyers.
Brand differentiation is important.
Easy to enter market as seller.
Buyers have good influence on prices,
and good knowledge to make decision.
eg: restaurant, clothing, cars |
| Oligopoly | Only a few sellers.
Brand name and advertising is important for differentiation.
Can be difficult to enter the market as seller.
Buyers have reasonable knowledge.
Consumers may not influence prices much.
eg: Westpac, Qantas |
| Monopoly | Only one business in market.
No consumer sovereignty (business sets the price).
Difficult to enter as a seller.
Product Differentiation is irrelevant.
eg: Metro, AUS Post Office. |
| Anti Competition Behaviour | -Price fixing by 2 or more businesses.
-Market zones
-Exclusive Dealing |
| Market zones | Where businesses agree with eachother to have only certain areas where they sell. |
| Problems with Monopoly Market | Seller can set the price.
Seller can restrict supply.
Businesses don't need to use resources efficiently, can sell for any price.
Product may be of poor quality, as there is no competition. |
| Why is competition good (Perfect/Monopoly) | Businesses need to use resources VERY efficiently, because of competition.
Lower prices for consumers.
Good quality products.
Big range of products for consumers. |
| Goal of the Economy & Society | Improve living standards of everyone. |
| Standards of living | -Material: individual access and consumption of goods and services. Can be improved by increasing GDP (total value of final goods and services produced in economy over time.)eg: products.
-Non-material: Quality of life: happiness, health, family, freedom, opportunity...etc. |
| How can living standards and livability be measured? | -Look at Country's GDP (Gross Domestic Product), tells how rich/well off country's economy is.
-determining GDP per capita.
-Happy Planet Index
-Livability Index |
| Liveability | Range of factors that contribute to community's quality of life.
Refers to natural and man-made environments, income, employment, healthcare, education, level of safety/crime. |
| What is Competitive Advantage? | Anything that gives company attraction of customers over competitors. Businesses must gain competitive advantage to compete with other businesses and survive. |
| How do businesses have influence over consumer decisions? | Advertising and marketing have incredible power and influence over the decisions that consumers make. |
| Supply | (In market) The amount of the product produced |
| Demand | (In market) The amount of product consumers want |
| Goods and Services | Involves production of physical and non-physical services (eg.education, haircut, clothes) |
| Role of Gov- Private Goods & Services | - excludable (reduces/affects availability) and rivalrous(depletable) in consumption.
-purchase/consumption reduces availability for other. Consumer can be legally charged if they do not pay. eg.milkshake. |
| Role of Gov- Public Goods & Services | -Non-excludable and non-rivalrous (non-depletable)
-Person who doesn't pay for good/service cannot be legally stopped. eg: streetpath, prison
-Free rider problem. Unfair burden of paying of shared good/service.
-Not a lot of profit made. |
| Role of Gov- Common Access Resources | -Resources that are not owned by anyone. eg: ocean, forest, fishing.
-Are non-excludable (non-depletable) and rivalrous in consumption.
-Government can exploit resources, reducing enjoyment people have from these resources.
-gov't must control proper use of resources. |
