Unit 1
Markets, Consumers
and Firms
1.1 1.4
Scarcity, Choice and Potential Conflicts The Role of credit in the econo
1.2 1.5
Enterprise, Business and The Economy Market Failure and Government Int
1.3 1.6
Introducing the Market: The Price Mechanism Revenue, Costs, Profit and Ca
, Unit 1
Markets, Consumers
and Firms
1.1
Scarcity, Choice and Potential Conflicts
1.1.1 1.1.2 1.1.3
The Economic Problem Business Objectives Stakeholders and their Obje
, 1.1.1
The Economic Problem
The Economic problem
Consumers have infinite wants, but A Free Market
Scarc
producers only have a scarce (finite)
number of resources. This means that This is a market where the is no interference from any
third parties (like the government or the world trade Scarcity is the
every consumers wants can be fulfilled so
organisation). The only forces in a free markets would be supplies and raw
this means choices have to be made
supply and demand and these two act to determine the is the main re
between wants and finite resources.
allocation of resources. Economic Proble
scarcity, cons
Trade Off A truly free market is theoretical, since it cannot exist in business must
real life due to third parties always interfering. decisi
Giving up one thing to have other, for
example using extra revenue in R&D
rather than taking more profit.
Allocation of Resources
Opportunity Costs
This is how the factors of production
The potential benefits that are (Labour, Land, Capital & Enterprise)
sacrificed when a business or are used to produce goods and
individual chooses one option services for consumers.
over another.
, 1.1.2
Business Objectives
Corporate Social Responsibility
Business Objectives
This is a business voluntarily acting in a social and ethically positive
Business objectives are goals that business will There are many reasons a business may have a CSR policy in place
have and want to reach.
• Altruism
There are two types of objectives; Profit objects
• Wanting a positive public image
and non-profit objectives.
• Competitive advantage/ USP
• Risk Mitigation
Profits objects
Non-Profit Objectives
• Profit maximising – This is when a
business tires to make as much profit as • Survival – Staying afloat in a market
possible, by lowering costs and
increasing revenue. • Market share – Increase the amount of the market you control
• Cost efficiency – Increasing efficiency to lower average cost to a minimu
• Sales Maximisation – Selling as much
as possible without making a loss. This • Return on investment – Making a profit of an investment
is usually what Non-Profit
Organisations aim to do. • Employee welfare – Making sure that employees are happy, which can
their productivity
• Satisficing – Not making the maximum • Customer satisfaction – Making sure that customers are happy, which c
profit or sales, but making “just customer loyalty
enough” to satisfy owners or
shareholders • Social objectives – Trying to maximise social welfare, similar to having a
Markets, Consumers
and Firms
1.1 1.4
Scarcity, Choice and Potential Conflicts The Role of credit in the econo
1.2 1.5
Enterprise, Business and The Economy Market Failure and Government Int
1.3 1.6
Introducing the Market: The Price Mechanism Revenue, Costs, Profit and Ca
, Unit 1
Markets, Consumers
and Firms
1.1
Scarcity, Choice and Potential Conflicts
1.1.1 1.1.2 1.1.3
The Economic Problem Business Objectives Stakeholders and their Obje
, 1.1.1
The Economic Problem
The Economic problem
Consumers have infinite wants, but A Free Market
Scarc
producers only have a scarce (finite)
number of resources. This means that This is a market where the is no interference from any
third parties (like the government or the world trade Scarcity is the
every consumers wants can be fulfilled so
organisation). The only forces in a free markets would be supplies and raw
this means choices have to be made
supply and demand and these two act to determine the is the main re
between wants and finite resources.
allocation of resources. Economic Proble
scarcity, cons
Trade Off A truly free market is theoretical, since it cannot exist in business must
real life due to third parties always interfering. decisi
Giving up one thing to have other, for
example using extra revenue in R&D
rather than taking more profit.
Allocation of Resources
Opportunity Costs
This is how the factors of production
The potential benefits that are (Labour, Land, Capital & Enterprise)
sacrificed when a business or are used to produce goods and
individual chooses one option services for consumers.
over another.
, 1.1.2
Business Objectives
Corporate Social Responsibility
Business Objectives
This is a business voluntarily acting in a social and ethically positive
Business objectives are goals that business will There are many reasons a business may have a CSR policy in place
have and want to reach.
• Altruism
There are two types of objectives; Profit objects
• Wanting a positive public image
and non-profit objectives.
• Competitive advantage/ USP
• Risk Mitigation
Profits objects
Non-Profit Objectives
• Profit maximising – This is when a
business tires to make as much profit as • Survival – Staying afloat in a market
possible, by lowering costs and
increasing revenue. • Market share – Increase the amount of the market you control
• Cost efficiency – Increasing efficiency to lower average cost to a minimu
• Sales Maximisation – Selling as much
as possible without making a loss. This • Return on investment – Making a profit of an investment
is usually what Non-Profit
Organisations aim to do. • Employee welfare – Making sure that employees are happy, which can
their productivity
• Satisficing – Not making the maximum • Customer satisfaction – Making sure that customers are happy, which c
profit or sales, but making “just customer loyalty
enough” to satisfy owners or
shareholders • Social objectives – Trying to maximise social welfare, similar to having a
