Scarcity and Choice
The fundamental economic problem caused by having unlimited wants but limited resources.
What is Scarcity?
The primary financial goal or value for most traditional private sector businesses.
What is to make a profit (Profit Maximisation)?
Any person, group, or organisation that has an interest in, or is affected by, the activities of a business.
What is a Stakeholder?
When you buy a share, you are buying a small fraction of ownership in this type of business structure.
What is a Company (or Corporation)?
Often described as the "price of money," this is the extra amount you are charged for borrowing money from a bank.
What is Interest (or the Interest Rate)?
The economic term for the "next best alternative" you give up when you make a choice.
What is Opportunity Cost?
The Māori business value of showing respect, generosity, and care for others (e.g., treating customers and staff like family).
What is Manaakitanga?
This internal stakeholder group provides their time and labour, and generally wants higher wages and safe working conditions.
Who are Employees (or Workers)?
This is the three-letter abbreviation for the main stock exchange in New Zealand where public shares are bought and sold.
What is the NZX (New Zealand Stock Exchange)?
The Reserve Bank of New Zealand uses this specific three-letter rate to influence all other interest rates in the country.
What is the OCR (Official Cash Rate)?
Time, money, and skills are all examples of this economic concept, which restricts our ability to satisfy all our wants.
What are Limited Means (or Resources)?
A business that focuses equally on "People, Planet, and Profit" is said to be measuring its success using this three-word framework.
What is the Triple Bottom Line?
This external stakeholder group provides a business with its raw materials and expects to be paid on time.
Who are Suppliers?
This is the term for the portion of a company's profit that is paid out to its shareholders as a cash reward.
What is a Dividend?
If the Reserve Bank wants to slow down inflation and stop people from spending too much, they will generally do this to interest rates.
What is raise them (increase them)?
If the NZ Government chooses to spend $50 million on a new hospital instead of a new high school, this is the opportunity cost.
What is the new high school?
This Māori concept translates to guardianship and protection; in business, it means operating sustainably to protect the environment for future generations.
What is Kaitiakitanga?
Consumers wanting lower prices to save money often creates a "conflict of interest" with this group, who want higher prices to increase their dividends.
Who are Shareholders (or Owners)?
If you buy shares at $2.00 each and sell them a year later for $3.50 each, the $1.50 profit per share is known as this type of gain.
What is a Capital Gain?
This is the specific name given to a long-term bank loan used to purchase a house or property.
What is a Mortgage?
Because this specific resource is strictly limited to 24 hours a day, even billionaires like Elon Musk face scarcity.
What is Time?
This Māori business concept focuses on building and maintaining strong relationships and connections both inside and outside the business.
What is Whanaungatanga?
This specific group doesn't work for or buy from the business, but they care deeply about the traffic, noise, and pollution the business creates in their neighbourhood.
What is the Local Community?
When a private company decides to list on the stock exchange and sell shares to the public for the very first time, it is known by this three-letter acronym.
What is an IPO (Initial Public Offering)?
If interest rates significantly decrease, this is what generally happens to the level of business investment and consumer spending in the economy.
What is it increases (goes up)?