Trade-Offs & Opportunity Cost
Define a trade-off
A trade-off is the option that is foregone when making a decision between two or more possibilities
Define seasonal unemployment
Where a person is unemployed because their skills are only demanded at certain times of year.
Give an example of a material standard of living
Items that can be purchased such as cars, houses, clothing, phones, or services such as dining out.
Give a description of globalisation
Where economies across nations are mostly free to trade with each other.
Define a Need and a Want
Need: Things that we can't live a minimal quality of life without such as food, clothing and shelter.
Want: Things that add to our quality of life beyond essentials such as television and XBox
Define opportunity cost
The value of the next best alternative
Identify the criteria required for a person to be classified as employed
15 years or over
Actively engaging in more than 1 hour of work per week and being paid in some for for that work (usually money).
Give an example of non-material standard of living
These are things we have access to that may improve our standard of living such as access to clean air, good physical and mental health, clean beaches and waterways, etc.
Who is Australia's largest trading partner?
China
Define GDP
Gross Domestic Product
The total revenue of a country once costs of production are removed.
Describe a difference between trade-off and opportunity cost
A trade-off is the thing that was given up when making a decision, OC is the value of what was given up.
What is underemployment?
Individuals that are classified as employed, but who are at least partly unemployed in the sense that they would prefer to be working more hours than they are.
Explain why a high material standard of living doesn't necessarily guarantee a high non-material standard of living
A person may have a high-paying job and access to lots of money, nice house and car but they may have to sacrifice time with family and friends to fulfil the requirements of that job. They may not get time to exercise, get outside or enjoy life. This will take a toll on mental & physical health, thus lowering non-material standard of living.
Define Imports and Exports
Imports: Goods purchased from overseas
Exports: Goods sold by Australia to overseas
What does the supply curve show?
The quantity that suppliers are willing to supply of a good at certain price points.
Why do economists use Opportunity cost or a cost benefit analysis when making decisions?
To help them make the most accurate decisions by knowing fully what is being given up when making decisions.
Define structural unemployment
Skills of the unemployed don’t match skills required by industry.
An example of this can be where an employee is made redundant in a car factory because their labor is now taken over by technology, making the human element obsolete.
Your skills are no longer desired in the market
Jobs requiring your skillset are being outsourced offshore
Define a tariff
A tariff is a tax put on imported goods (purchased from overseas) to make locally made goods more competitive.
For example: Australia used to have tariffs on imported cars because they were made more cheaply than cars in Australia. If they were allowed in at their original price, they would be much cheaper than Australian cars and no one would buy locally.
Give an advantage of globalisation
It gives us access to goods that may not be available in our own country (electronics)
We may be able to sell our goods to countries that may not have adequate access (iron ore and gold)
What are the three basic economic questions?
What to produce
How to produce
Who to produce for
If I decided to spend 6 hours on the Murray River having a swim instead of working at Woolies for those 6 hours where I earned $14 per hour, what is the opportunity cost of going swimming?
6 x $14 = $84
Why do unemployment statistics tend to look better than they actually are?
To be counted as employed, you only need to be working more than one hour a week. A person could be working very few hours as a casual employee but it isn't enough to live off. These people are called "underemployed."
The underemployed are working but would like to be working more hours. As times are uncertain due to COVID, employers are more likely to employ people as casuals.
This is called, "casualisation of the workforce."
What is a disadvantage of tariffs?
Tariffs are meant to be a temporary measure for local industries to establish themselves and become more competitive. What tends to happen is local companies get the government to use tariffs to protect them and keep high prices. This means that they remain uncompetitive, costing Australian consumers more money.
Give a disadvantage of globalisation
Importing goods from other countries may jeopardise locally-made goods as the imports may be cheaper.
Imported goods may not be made to the same standard as locally made goods.
As per law of demand, when the price goes up...
Demand goes down