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Economic Factors Assignment 2 Mr. Barry Business BTEC Year 12
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Inflation and unemployment
The two main modern economic problems Mr. Barry Business BTEC Year 12
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Why unemployment is a problem
Less output Less tax revenue Higher welfare payments Lower demand Lower living standards Social problems Mr. Barry Business BTEC Year 12
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Yet some firms might see it as a benefit
Lower wages Larger “pool” of workers Unemployment has been as high as 3.5 million in the last 20 years Mr. Barry Business BTEC Year 12
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Types of unemployment Frictional Seasonal Structural Cyclical
moving between jobs Seasonal e.g. Santa’s elves Structural jobs no longer exist Cyclical recession Mr. Barry Business BTEC Year 12
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Inflation What it is: A general, sustained increase in prices
Mr. Barry Business BTEC Year 12
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Why it is bad Uncertainty Admin problems Staff pay rises
Production costs especially foreign exchange More than 3% is bad Mr. Barry Business BTEC Year 12
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What causes inflation DEMAND PULL STRONG DEMAND HIGHER WAGES
NEEDED TO PAY HIGHER PRICES BUSINESSES CAN INCREASE PRICES PRICES OF GOODS RISE Mr. Barry Business BTEC Year 12
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What causes inflation COST PUSH INCREASED PRODUCTION COSTS
RAW MATERIALS MORE EXPENSIVE PUT UP PRICES OR CUT PROFITS HIGHER STAFF WAGES Mr. Barry Business BTEC Year 12
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The basic aim of consumers is to buy as many goods as possible at the cheapest price
The basic aim of firms is to maximise profits THESE AIMS ARE NOT THE SAME! Mr. Barry Business BTEC Year 12
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The Three Business Sectors
Primary Products are pulled out of the ground or sea Secondary Raw materials are altered in some way Tertiary A service is provided Mr. Barry Business BTEC Year 12
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Different types of markets
All markets require three elements Seller or Supply Customer or Demand A product These are what determine price Demand side Supply Side Mr. Barry Business BTEC Year 12
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The Supply and Demand Chart
THIS AXIS SHOWS THE PRICE A PRODUCT WILL BE SOLD AT HIGH PRICE S HIGH QUANTITY LOW QUANTITY THIS AXIS SHOW THE AMOUNT OF PRODUCT THAT WILL BE AVAILABLE D LOW PRICE QUANTITY OF PRODUCT Mr. Barry Business BTEC Year 12
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Single Markets Products very similar or identical
Petrol Airline travel Nature of competition Price Basic aspects of product/service Mr. Barry Business BTEC Year 12
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Differentiated Markets
Many kinds of product within a market Confectionery Cars Nature of competition Price Product differentiation Target market Mr. Barry Business BTEC Year 12
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