51 terms

Lec 1: introduction to business economies (ch 1, 2)


Terms in this set (...)

PEST analysis
Where the political, economic, social and technological factors shaping a business environment by a business so as to devise future business strategy
Primary production
The production and extraction of natural resources, plus agriculture
Secondary production
The production from manufacturing and construction sectors of the economy
Tertiary production
The production from the service sector of the economy
Gross domestic product (GDP)
The value of output produced within the country over a twelve-month period
The decline in the contribution to production of the manufacturing sector of the economy
A group of firms producing a particular product or service
Industrial sector
A grouping of industries producing similar products or services
Standard industrial classification (SIC)
The name given to the formal classification of firms into industries used by the government in order to collect data on business and industry trends
Industrial concentration
The degree to which an industry is dominated by large business enterprises
Business economics
It is about the study of economic decisions made by business and the influences upon this.
It is also concerned with the effects that this decision making has upon other businesses and the performance of the economy in general
Business environment
It refers to the environment within which business decision making takes place.
It is commonly divided into four dimensions: political, economic, social, and technological.
Economic dimension
The economic dimension of the business environment is divided into two: the microeconomic and macroeconomic environments.
It analyses factors specific to a particular firm in a particular market
It considers how national and international economic circumstances affect all business
Production types
It is divided into being primary, secondary or tertiary.
Most recently in the UK the tertiary sector has grown and the secondary sector contracted
Firms are classified into industries, and industries into sectors.
Such classification enables us to chart changes in industrial structure over time and to assess changing patterns of industrial concentration
The performance of a business is determined by a wide range of both internal and external factors, such as business organisations, the aims of owners and managers, and market structure.
The excess of human wants over what can actually be produced to fulfil these wants
The act of using goods and services to satisfy wants.
This will normally involve purchasing the goods and services.
The transformation of inputs into outputs by firms in order to earn profits (or meet some other objective)
Factors of production (or resources)
The inputs into the production of goods and services: labour, land and raw materials, and capital
All forms of human input, both physical and mental, into current production
Land (and raw material)
Inputs into production that are provided by nature: e.g. unimproved land and mineral deposits in the ground
All inputs into production that have themselves been produced: e.g. factories, machines, and tools
The branch of economics that studies economic aggregates (grand totals): e.g. the overall level of prices, output and employment in the economy
Macroeconomic environment will be an important determinant of a business's profitability
Aggregate demand
The total level of spending in the economy
Aggregate supply
The total amount of output in the economy
The branch of economics that studies individual units: e.g. households, firms, and industries.
It studies the interrelationships between these units in determining the pattern of production and distribution of goods and services.
Because resources are scarce, people have to make choices.
Society has to choose by some means or other what goods and services to produce, how to produce them, and for whom to produce them
Microeconomics studies these choices
Rate of inflation
The percentage increase in the level of prices over a twelve-month period
Balance of trade
Exports of goods and services minus imports of goods and services.
If exports exceed imports, there is a balance of trade surplus (a positive figure).
If imports exceed exports, there is a balance of trade deficit(虧損) (a negative figure)
A period where a national output falls for a few months or more
The number of people who are actively looking for work but are currently without a job
Demand-side policy
Government policy designed to alter the level of aggregate demand, and thereby the level of output, employment and prices
Supply-side policy
Government policy that attempts to alter the level of aggregate supply directly
Barter(物物交換) economy
An economy where people exchange goods and services directly with one another without any payment of money.
Workers would be paid with bundles(捆) of goods
The interaction between buyers and seller
Opportunity cost
The cost of any activity measured in terms of the best alternative forgone
Rational choices
Choices that involve weighting up the (marginal) benefit of any activity against its (marginal) opportunity cost
If the marginal benefit exceeds the marginal cost, it is rational to choose to do more of that activity
Marginal costs
The additional cost of doing a little bit more (or 1 unit more if a unit can be measured) of an activity
Marginal benefits
The additional benefits of doing a little bit more (or 1 unit more if a unit can be measured) of an activity
Central economic problem
It is that of scarcity.
Given that there is limited supply of factors of production (labour, land, and capital), it is impossible to provide everybody with everything they want.
Potential demands exceed potential supplies
Subject of economics
It is usually divided into two main branches: macroeconomics and microeconomics
Business choices
How to produce, what inputs to use, what price to charge, how much to invest
Time-series data
Information depicting(描述) how a variable (price of goods) changes over time
Cross-section data
Information showing how a variable (consumption of goods) differs between different groups or different individuals at a given time
Index number
The value of a variable expresses as 100 plus or minus its percentage deviation from a base year
Base year (for index numbers)
The year whose index number is set at 100
Consumer prices index (CPI)
An index of the prices of goods bought by a typical household
Weighted average
The average of several items where each item is ascribed(歸於) a weight according to its importance.
The weights must add up to 1.
Functional relationship
The mathematical relationships showing how one variable is affected by one or more others