Close
An organisation
Why do we need organisations?
Profit Seeking Organisations
Not for Profit Organisations (NFP)
Mutual Organisiations
Public Sector Organisations
Private Sector Organisations
Co-Operatives
A queue of people standing at a bus stop is an example of an organisations if they all want to travel to the same place.
True or False?
Which of the following best completes the statement: "Financial considerations are not a constant constraint in NFP organisations because..."
A) They have no profits to reinvest
B) They meet the needs of people who cannot afford to pay very much
C) They do not have a flow of sales revenue
D) Their prime objectives are not financial but they still need money to enable them to reach them
Which of the following is not a key stakeholder group for a charity?
A) employee and volunteers
B) shareholders
C) donors
D) beneficiaries
Which one of the following would not be a stakeholder for a mutual society?
A) shareholders
B) customers
C) employees
D) managers
Some building societies have de-mutualized and become banks with shareholders. Comment on how this may have effected lenders and borrowers.
Which of the following are usually seen as the primary objectives of companies?
(I) to maximise the wealth of shareholders
(II) to protect the environment
(III) to make profit
A) I, II, & III
B) I & II only
C) II & III only
D) I & III only
Many schools run fundraising events such as fêtes, where the intention is to make a profit. This makes them "profit-seeking".
True or False?
Attempts to measure and increase shareholder value have focused on incorporating 3 key issues:
Many variables will affect the value of shares. These fall into 2 groups:
Stakeholders
Stakeholder Interest
Stakeholder Influence
Three main economic systems:
Market Economy
Command Economy
Mixed Economy
free market
Individual Demand
When the demand for a good or service changes in responses to a change in price, the change is referred to as:
1)
2)
Demand Curve
Market Demand
Conditions of Demand
Reminder on
INCREASES/DECREASES
EXPANSION/CONTRACTION
A demand curve is drawn for JMD, a health supplement provider, assuming all but one of the following remains unchanged. Which item can vary?
A) The price of the competitor's price
B) The cost of labour to make the product
C) The price of the product
D) The level of growth in the economy
Which one of the following would lead to the demand curve for health supplements shifting to the right?
A) Adverse publicity that suggests supplements to be harmful
B) A fall in disposable income of consumers
C) A fall in the price of supplements
D) An increase in the size of the population due to people living longer
Which of the following would not lead to a shift in the demand curve for overseas holidays?
A) An advertising campaign by holiday-tour operators.
B) A fall in the disposable income of consumers
C) A rise in the price of domestic holidays
D) A rise in the exchange rate for the domestic currency
Two ways of calculating Price Elasticity of Demand (PED):
Principals
Agents
Principal-Agent Problem
Corporate Governance
A company makes personalised gifts, which of the following is not a prime objective of corporate governance:
A) to control directors' activites
B) to improve the way the company is run
C) to improve employee's working conditions
D) to protect shareholder interest
Give 2 reasons why shareholders may lose control of the company they own.
Summary of price elasticity:
Price Elasticity of Demand
Factors that influence PED
Using the factors that influence PED, consider if the demand for petrol to be elastic or inelastic.
PED and total revenue
If the demand for a good is price elastic, a fall in its price will lead to:
(i) a rise in unit sales
(ii) a fall in unit sales
(iii) a rise in total sales revenue
(iv) a fall in total sales revenue
A) (i) & (iii) only
B) (i) & (iv) only
C) (ii) & (iii) only
D) (ii) & (iv) only
Supply Curve (supply)
Market Supply Curve
Conditions of supply
Summary Elasticity of Supply
Price Elasticity of Supply
Factors that influence elasticity of Supply
Using the factors that influence elasticity of supply:
Is the supply of fresh milk price elastic or inelastic?
What effect will higher wages have on the supply curve?
Equilibrium
When the price of a good is held above the equilibrium price, the result will be:
A) excess demand
B) a shortage of the good
C) a surplus of the good
D) an increase in demand
When the price of a good is reduced and held below the equilibrium price, the result will be all except one of the following:
A) excess demand
B) a shortage of the good
C) a surplus of the good
D) an expansion in demand
Equilibrium Changes
Much of the world's coffee is grown in South America. By use of supply and demand curves explain what would happen to the price of coffee if bad storms in South America damaged much of the coffee crop.
Market Failure
Public goods
Public goods:
non-excludability
Public goods:
non-rivalry
Pure public goods are goods:
A) which are produced by the government
B) whose production involves no externalities
C) whose consumption by one person implies less consumption by others
D) where individuals cannot be excluded from consuming them
Economies of Scale
Externalities
One way of reducing negative externalities:
True or False?
The cost of packaging for cigarettes is a negative externality.
True or False?
The benefits to society from education are a positive externality.
True or False?
The fine incurred for polluting a watercourse is a negative externality.
True or False?
Damage to pine forests from pollution is a negative externality.
Merit Goods
Demerit Goods
Which of the following are examples of merit goods?
A) street lighting True or False?
B) education True or False?
C) healthcare True or False?
D) defence True or False?
Competition Policy
Scope of Regulation (competition policy):
Mergers and Acquisitions
Scope of Regulation (competition policy):
Restrictive Trade Practices
Scope of Regulation (competition policy):
State created regional monopolies
Which of the following is not a valid economic reason for producing a good or service in the public sector?
A) The good is a basic commodity consumed by everyone
B) It is a public good
C) There is a natural monopoly in the production of the good
D) It is a merit good
Government sets minimum prices
Government sets maximum prices
A government introduces a minimum price below free market price. Which one of the following describes the consequences of this?
A) There will be no effect on market price or producer incomes
B) Suppliers will withdraw from the market due to falling incomes
C) Unsold surpluses of the product will build up
D) Demand for the product will contract
Diseconomies of Scale
Internal Economies of scale
(internal economies of scale)
technical economies
(internal economies of scale)
financial economies
(internal economies of scale)
trading economies
(internal economies of scale)
managerial economies
External Economies of Scale
Technical Diseconomies of scale
Trading diseconomies of scale
Managerial diseconomies of scale
In a company such as ESD, a calculator manufacturer, which of the following is not a source of economies of scale?
A) The introduction of specialist capital equipment
B) Bulk-buying
C) The employment of specialist managers
D) Cost savings resulting from new production techniques
A good has a price inelastic demand. If the supply curve shifts to the left the result will be a rise in price and:
A) a decrease in demand and a fall in total expenditure on the good
B) a decrease in demand and a rise in total expenditure on the good
C) a contraction in demand and a fall in total expenditure on the good
D) a contraction in demand and a rise in total expenditure on the good
