TOPIC 3 MARKETS
The role of consumers in the economy
Consumer sovereignty
Patterns of consumer spending and saving/dissaving
- in the economy as a whole, as income rises the level of saving increases
Factors influencing individual consumer choice
Sources of income
Patterns of consumer spending and saving/dissaving
- variations with income and age
- in the economy as a whole, as income rises the level of saving increases
Factors influencing individual consumer choice
- income
- price
- price of substitutes
- price of complements
- preferences/tastes
- advertising
Sources of income
- the return for resources: wages, rent, interest and profit
- social welfare
The role of business in the economy
Definition of a firm and an industry
A firm's production decisions
Business as a source of economic growth and increased productive capacity
Goals of the firm
Efficiency and the production process
Impact of investment, technological change and ethical decision-making on a firm through:
A firm's production decisions
- what to produce
- what quantities to produce
- how to produce
Business as a source of economic growth and increased productive capacity
Goals of the firm
- maximising profits
- maximising growth
- increasing market share
- meeting shareholder expectations
- satisficing
Efficiency and the production process
- productivity
- internal and external economies of scale
- diseconomies of scale
Impact of investment, technological change and ethical decision-making on a firm through:
- production methods
- prices
- employment
- output
- profits
- types of products
- globalisation
- environmental sustainability