Transcript 11 Economics

Quizzes
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You own a small airline. Which sector of the
Economy are you?
You own the company alone. What kind of
business structure do you have?
What are the advantages and disadvantages of
this business structure?
You want to expand and invest in some new &
bigger air planes to carry more passengers.
Suggest 4 sources of finance
You decide to offer package holidays instead of
just air travel. What kind of business expansion
is this?
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You decide to form a private company with your best
mate Tim. What are the advantages and disadvantages
of this business ownership?
3 months later you find your business is getting a bit hard
for you and Tim to manage. Which management
structure would be best for your business?
Several big airlines have entered the market and you are
finding competition a bit tough. You enlist the services
of Sarah’s Advertising and Marketing Firm. What services
can Sarah’s firm provide you with?
A year later business is booming, explain how you and
Sarah are interdependent?
4 years later you have a fleet of 10 aircraft, 2000 staff
and business is booming but you notice that some of your
costs seem to be rising more than your profit? Explain
why?
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State the factors of production & their rewards
Define dividends
Describe the difference between a merger and
a takeover?
Define Productivity
Explain how division of labour and
specialisation lead to increased productivity?
Describe Economies of Scale.
Why are there now more people employed in
the Tertiary Sector than Primary?
Name 4 producer goals
The market for ACDC Concert Tickets
is in Surplus. A) Show this & then B)Explain
how the market will return to equilibrium.
Remember:
Identify
Explain
Relate
A)See WB/Notes
B)
I: A surplus is where the price is above equilibrium
and the Quantity Supplied exceeds the Quantity
Demanded.
E: The Price in the market will fall to clear excess
tickets. When the Price decreases, Quantity
Demanded will increase and Quantity Supplied will
Increase until Equilibrium is reached.
R: The market will clear when the Quantity
Supplied is equal to the Quantity Demanded.
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Define a Market
Show a market in Equilibrium
Show a market with Excess Demand
Show a market with Excess Supply
State the other name for Excess Demand
State the other name for Excess Supply
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A market is a place or situation where
buyers and sellers meet to exchange goods
or services.
See diagram
See diagram
See Diagram
Shortage
Surplus
Define Equilibrium
2. If Excess Demand, the price will need to………?
3. If Excess Supply, the price will need to………..?
4. Show the Market for Jonas Brother’s CD’s in
Equilibrium.
5. Show the (likely) effect of the price of Miley
Cyrus CD’s decreasing in Price
6. What has happened to the equilibrium
Price…….?
1.
Equilibrium is where supply = demand.
Or where all that consumers are willing and
able to demand is supplied. There is no surplus
or shortage.
2. Increase
3. Decrease
4. See WB
5. See WB – Assuming is a substitute – Decrease in
Demand.
6. It will decrease, as will equilibrium Quantity
1.
For each of the following events draw up the
market and show the effect on either S or D
 The Price of Tickets Falls from Pe to P1
 Zac Effron is caught in a drug and racial
abuse scandal
 The Federal Gov’t decreases the min wage
for Actors
 HSM 3 receives 10 Grammy nominations
 Tax cuts are announced for youths
 The Federal Gov’t announces stricter
regulations for employment of young people
This time for Twilight – New Moon
1. Kristin & Rpatz are backtogether, then split
no together…no split…
2. The US gov’t grants the production unit a
subsidy
3. Stephanie Meyer goes to court and gets a
higher royalty
4. True Blood win’s more Emmys
5. Rpatz is voted most sexiest man ever!
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Demand Increases – Pe & Qe ↑ (Tastes &
Preferences)
Supply Increases – Pe ↓ Qe↑ (Subsidy)
Supply Decreases – Pe ↑ Qe ↓ (Cost of
Production Increases)
Demand decreases Pe & Qe ↓ (Substitute)
Demand increases (Tastes and Preferences)
You are being manipulated!!!
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Explain the Economic Problem. (Hint link Limited
Means, Choice, Scarcity, Opportunity Cost &
Unlimited Wants
Budget Catfood is an example of which type of
good?
Demand for these types of good increases as your
income increases?
Define disposable income.
State the law of demand
Explain the law of demand
I ate six chocolate truffles stands for?
Show an increase in quantity demanded
Show a increase in demand
What is the difference?
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The economic problem is Scarcity. This means that humans have
Unlimited Wants relative to Limited Means (time, money and
skill). So they must make a Choice on how to allocate their
Limited Means. Each choice results in a Opportunity Cost. This
means the next best option foregone.
Inferior
Luxury, Normal
Income after Tax
As price increases, quantity demanded decreases, price decreases
quantity demanded increases. Ceteris Paribus.
Consumers are motivated to try and get the best value. When the
price is low it is more affordable so Quantity Demanded will
increase where if the price is higher it is more expensive so
Consumers will decrease their quantity demanded.
Income, Advertising, Substitutes, Complements, Tastes & Pref.
Both *8 & 9- See WB
Increase in Quantity Demanded caused by increase in price.
Increase in Demand caused by a change in non price factors. E.g
Increase in advertising.
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Define Market Supply
State the Law of Supply.
Explain the Law of Supply
List the non price factors of supply
Show a increase in Supply
Show the effect of a price decrease
Define a Tariff
Define a Quota
Show a decrease in Supply
Show an increase in Quantity Supply
Show effect of following:
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Increase in price of text messages (complement)
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New signal towers need to be built to maintain current
coverage
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Cell phones go up in Price
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Gov’t gives a subsidy to Cell phone producers
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Cell phones said to give you cancer
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New Moon features lots of cell phone use, making it look
cool.
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Text bulling leads to a ban on cell phone use by under 16
year olds.
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Successful wage negotiations by cell phone
manufacturing workers leads to increase in their wage.
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PAYE is increased in all brackets – 25%, 38%, 45%
10. Company tax decreased in NZ.
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Total of all Individual Supply at each and every price &
or horizontal summation of all individual quantity
supplied at each and every price
Price Increases, Quantity Supplied Increases, Price
decreases, Quantity Supplied decreases
Producers motivated by profit. A higher price means
more profit to compensate for a producers opportunity
cost. What they could be doing if not increasing
production. An increase in price makes producers more
willing and able (cover extra costs) to
producer/sell/supply more.
Costs of Prod, Related Good, Tech, Productivity, Legal,
Trade, Environmental, Cultural, Political
Q 5-6,9-10 See WB
Tax on imported Goods
A limit on the amount that can be
sold/Exported/Imported
Interdependence between Sectors
Draw up a 5 Sector Circular flow showing only
money flows
List the 5 Sectors and fully describe each
including the relationship they have with other
sectors.
e.g. Households:
All households (consumers) in an economy.
- Producers – G & S, Expenditure, Resources,
Income
- Financial – Savings, Loans (credit) Interest
- Gov’t – Taxation, Benefits (Transfer Payments)
Complete (2007)
Flows…. (2007)
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Name a money flow from Producers to
Banks
Explain how this flow is affected by more
investment by firms.
Name a money flow from Government to
Households
Explain how this flow is affected by more
unemployment in households.
Effects of a change & Flow On
Effects
 Gov’t
increases company tax
 Manufacturers increase production
 Gov’t increases income tax
 Increase in Transfer Payments
 Increase in Tourism to NZ
 Increase in Exports
 Increase in value of NZ$ (appreciation)
 Payment for Carbon Credits required (ETS)
 Increase in the Minimum Wage
 Increase in House Prices
 Increase
in Fonterra payouts to farmers
 Increase in interest rates
 Kiwisaver Introduced
 Oil exploration begins in Southland.
↑in income tax will make Consumers Disposable Income↓, &
the Government will collect > income tax revenue
 Consumers will d < g & s, switch to inferior products, buy
< luxuries, save <
 Producers sell less g & s b/c consumer expenditure has ↓.
→ < production, < Investment, < Employment (poss cut
back on existing),< Revenue , < profits
 Financial receive < savings (b/c h/h ↓savings) so lend out < → <
revenue, profits
 Gov’t received > income tax, may be able to repay debt, ↑ ↑
Gov’t expenditure inc transfer payments. Might receive <
income tax in future if unemployment increases, also < GST
 Overseas < D for Imports, < Import Payments,
This means the introduction of the Emissions Trading Scheme.
Firms who emit CO2 > allowed will have to buy credits (COP
↑), firms who emit < CO2 than allowed will be able to sell\
credits (COP ↓). Likely prices for most G & s will ↑
H/H - ↓ D for G & S, ↓ Savings
Prod - ↑ Prices (Supply will ↓) to pay for ↑ COP, Invest CO2
reducing tech.
Financial - ↑ Profits – (↑loans for Firms), but will receive < savings
from Consumers, maybe ↑ Credit to Consumers to pay for ↑ Prices
Govt – Regulating ETS may mean < Expend on other areas of Gov’t
exp. <Consumer Exp & Incomes , < Taxation
Overseas – Less Imports & Exports – “Food Miles” – Less D, Prices
Increase in NZ = Export Prices Increase