Miz Biz | Economics Essentials
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1. Advertising: Action taken to promote a good, service or brand.
Advertising aims to increase demand for the product. Example:
Television adverts for McDonalds.
2. Capitalistic economy: A market without government
involvement. All production decisions are made by producers
responding to demand and supply in order to maximise
profits.
3. Consumer: A person who uses goods or services. Economists
often refer to consumers as 'households'. Example: People
eating cheeseburgers at McDonalds
4. Consumption: Process of using up goods and services to
satisfy wants and needs in the short term. Example: Buying a
cheeseburger.
5. Demand: The amount of a good or service consumers are both
willing and able to purchase at a particular price and point in
time. Example: If Cheeseburgers are $2 Mr P is willing and
able to purchase 8 right now.
6. Economic problem: A problem of scarcity and choice. There
are unlimited wants but limited resources to produce the
goods and services to satisfy those wants.
7. Economics: A social science examining the choices individuals
make in order to satisfy their needs and wants with limited
available resources.
8. Enterprise: Human ability to organise the other factors of the
production process. Examples: School principal, business
owner, people starting new companies.
9. Exports: A business transaction in which overseas dollars are
paid to Australian producers for goods or services. Example:
A foreign student studying at UWA.
10. Goods: Merchandise or manufactured articles. Tangible items
which can be purchased and owned by households. Examples:
iPads, pens and SUV's.
11. Government spending: Expenditure by the government on
public goods and welfare payments. Example: Building a
public school.
12. Imports: A business transaction in which Australian dollars are
paid to overseas producers for goods or services. Example:
Buying a Toyota.
13. Income: Returns paid to owners of productive resources.
Examples include returns for giving up land, labour, capital
and enterprise.
14. Industry: Group of competing firms producing the same good
or service or using the same processes. Example: Education
industry, Mobile phone industry.
15. Interest: The return on savings and the cost of borrowing. Also
used by economists to describe payment in exchange for
capital. Example: Income earned by a hire company for
lending out musical instruments.
16. Investment: Dollars spent by firms on capital items intended
to create future profits. Example: new machine.
17. Labour: All human effort involved in the production of goods
and services. Labour can be physical or mental, skilled or
unskilled.
18. Land: Natural resources which are 'gifts of nature. Examples
include water, soil, trees and fish.
19. Law of Demand: Law outlining the relationship between price
and demand. As price increases the quantity demanded of a
good decreases. Example: As the price of a cheeseburger
increases from $2 to $3, quantity demanded may decrease
from 400 to 200.
20. Mixed economy: economic system that combines both private
ownership and government ownership of the means of
production
21. Needs: Items neccesary for survival. Examples: Food, Water,
Shelter.
22. Opportunity Cost: The most desirable alternative given up as
the result of a decision
23. Production: Any activity by firms directed towards the
satisfaction of needs and wants through exchange. Example:
McDonalds staff preparing cheeseburgers.
24. Productivity: Quantity of goods and services produced from a
given quantity of resources. Example: If a worker learns a
method that allows them to make more burgers per hour, they
have become more productive.
25. Real income: The purchasing power of monetary income.
What can a consumer's income actually purchase. Example: If
most goods at the supermarket double in price, my real
income is lower even though I am earning the same amount in
dollars.
26. Rent: Payment in exchange for giving up land. Example:
Income paid to an owner of a private oval by a sports club.
27. Resources: Anything used to help satisfy needs and wants.
Sometimes known as factors of production. Examples include
land, labour, capital and enterprise.
28. Savings: The part of a consumers income which is not spent on
consumption or paid in taxes. Example: The difference
between an after tax income of $50K and expenditure of $30K
= $20k Savings.
29. Services: Non material objects produced in order to satisfy
needs and wants. Services are not usually 'owned' by the
purchaser. Examples: Accountant, Lawyer, Insurance.
30. Substitute: An alternative which satisfies the same want or
need. Example: Consumers of cola products may consider
Coke and Pepsi substitute products.
31. Supply: The amount of a good or service firms are willing and
able to make available for sale at a particular price and point
in time. Example,if offered $2 per cheeseburger, McDonalds is
willing and able to offer 200 burgers for sale tomorrow.
32. Taxation: Payments made to government by consumers and
producers. Example: GST, income tax.
33. Wages: Payment in exchange for giving up labour. Example: Wages made by a student working at Big W.
34. Wants: Desires which are not necessarily needs. Examples include Champagne, BMW's and private education.