eco - topic 1 and 2

china and aus: gdp

5% (Feb 2026), 2.6% (March 2026)

china and aus: HDI

0.797, 0.958

china and aus: income gini

0.36 (2022), 0.34 (2020)

china and aus: CO2 emission per capita

9.4 tonnes, 14 tonnes

china and aus: role of govt in education

china:

• state-run, public education

• funded by state

australia

• state govt manage schools

• federal govt provides $33.1 billion in funding

china and aus: role of govt in healthcare

china

• chinese govt owns and maintains most hospitals

• govt provides basic health insurance to 95% of population

australia

• medicare - federal govt owned

• pharmaceutical benefits scheme (PBS) - subsidises cost of prescription meds

china and aus: role of govt in social welfare

china

• hukou system - those who lived in rural areas received less access to welfare, though reforms have been announced in an attempt to reduce these inequities

australia

• housing, child protection, disability, employment services - JobKeeper

• funded by federal government

productivity + how is it calculated?

• measure of the rate at which output of goods and services are produced per unit of input (e.g labour, capital, etc)

• calculated as quantity of output / quantity of inputs

why is productivity growth important?

it has contributed to significant improvements in living standards

labour cost of goods

the number of hours a worker needs to work to purchase goods and services

return for factors of production

rent, wages, interest, profit

key economic issues

• what to produce?

• how to produce?

• how much to produce?

• how to distribute production?

consumer goods

goods produced for immediate satisfaction

capital goods

goods used for the production of g.a.s

GDP

total value of g.a.s produced in an economy in a year

advantages of market economy

• provides incentives for people to work hard, take risks

  • find more efficient methods of production

disadvantages of market economy

• can be inequitable

• businesses may mislead consumers

• may fail to provide g.a.s needed by households - e.g public transport

role of government in market economy

• to smooth the fluctuations of business cycle

• redistributing income (via tax and social welfare)

• regulating behaviour of firms (e.g minimum wages)

• intervening when markets don’t operate in the best interests of the economy (ACCC)

• providing g.a.s that the market fails to provide (e.g parks)

what happens to ppf curve when unemployment rises/falls?

• rises: ppf will shift left; less resources available

  • falls: ppf will shift right; more resources available

2021 COVID recession - impact on economy

• closed borders → disrupted supply chains

• lockdown restricted production + consumption

• global GDP fell by 3.1% in 2020

• RBA lowered cash rate to 0.1% (exp. MP)

• JobKeeper (exp. fiscal policy)

  • unemployment increased to 7.4% in 2020

2022 - ukraine war + inflation → impact on economy

• supply chain disruptions

• significant increase in fuel prices - US$120 barrel oil June ‘22

• businesses struggled w/ rising input costs

• cash rate increased to 3.1% in Dec ‘22 to combat inflation

resource booms 2003-present → impact on economy

• commodity prices 3x from 2003 to 2011

• stimulated the economy after GFC in 2009

• income per cap increased by 20% from 2000s to mid 2010s

pure market economy

• economic system where all major economic decisions are made by individuals and private firms

• motivated by self interest

• no government intervention

centrally planned economy

• economic system where government planners make economic decisions

• there is little room for individual choice to influence economic outcomes

mixed economy

decisions concerning production + distribution of g.a.s are made by a combination of market forces and government decisions.

characteristics of a market economy

• supply and demand determine prices of g.a.s

• private ownership of property

• consumer sovereignty

• freedom of enterprise

• competition

consumer sovereignty

the manner in which consumers, collectively through market demand, determine what is produced and quantity of production

factors that reduce consumer sovereignty

• marketing

• misleading/deceptive conduct

• planned obsolescence

• anti-competitive behaviour - e.g Apple products compatibility

factors which influence saving/spending

• income levels

• future expectations

• cultural factors

• confidence

• life stage/age

• government policies

factors affecting consumer choice

• income level

• price of g.a.s

• price of substitute + complementary goods

• consumer preferences

• advertising

welfare spending from the government - %

• elderly - 38%

• disabilities - 31%

• unemployed - 6%

industry

consists of firms involved in making a similar range of products that usually compete with each other

contributions of business to economy

• increased eco growth

• regional development - improves infrastructure, liveability

• increases productive capacity

• increased tax revenue for govt

ways the government offers assistance to new businesses

• financial assistance

  • minimum viable product (MVP) ventures program provides grants between $25-50k to help startups commercialise products

• mentoring

  • service NSW business bureau - one-on-one support for businesses

goals of a firm

• maximising profit + growth

• meeting shareholder expectations

• satisficing behaviour

  • e.g firm may focus on environmental goals to attract customers though they lose profit

key drivers of productivity: specialisation

• specialisation of labour

• location of industry

• large-scale production

  • highly specialised capital equipment

how does productivity improve living standards?

• less wastage of scarce resources

• lower production costs

• higher profits

• higher income

economies of scale/DEOS

cost saving advantages that result from a firm expanding its scale of operations

• disadvantages, beyond a certain point

EXTERNAL: due to growth of industry

outcomes of internal EOS

• large firm can invest in more efficient capital equipment

• can buy raw materials in bulk

• can put more resources towards research/development

outcomes of internal DEOS

• management issues (firm gets too big)

  • lack of comm. in management → inefficiency

• may lead to duplication of paperwork

• red tape → excessive admin., regulations/rules

outcomes of external EOS

• increasing localisation of industry - e.g silicon valley

• as industry grows, firms in that industry benefit

  • govt may provide special research to promote industry

outcomes external DEOS

• growth of industry causes pollution

• increasing concentration of industries can cause congestion in urban areas

  • e.g tokyo

• as industry grows, cost of raw materials could rise

• higher labour costs due to skill shortages

learning by doing

as a firm continues to repeat production process, they become more efficient as the firm gets more practice

ethical decision making

when business decisions about production methods, employment and other matters are made taking into consideration the impacts on society and the environment, and not simply to maximise profits of firm

law of diminishing returns

states that there comes a point when an additional factor of production results in a lessening of output

implications of tech + ethics: production methods

tech change + innovation have increased productive capacity of economy

• makes it possible to use resources efficiently

implications of tech + ethics: prices

• the internet - price check websites

  • has forced firms to reduce prices to compete w/ overseas sector

implication of tech + ethics: employment

• tech change has made previous jobs redundant - e.g factory workers

• growth of new tech provides new job opportunities - e.g software engineering

implications of tech + ethics: output and profits

• businesses that invest in better tech are most likely to be able to offer better quality products at a lower price

  • e.g Microsoft invested $5 billion in AI, cybersecurity, cloud computing

implications of tech and ethics: types of new products

• new tech expands range of products to produce to satisfy demand

  • e.g 3D printing for prosthetic limbs

• ethical decision making → affects types of products

  • e.g plant-based meat

implications of tech and ethics: globalisation

• tech allows for global money + stock markets

• low cost of communication → allows info from consumers to businesses to travel faster

• overseas market for goods

• negative: has allowed global companies to source unethical means of production

  • e.g SHEIN

• cadbury - only fair trade chocolate

implications of tech and ethics: sustainability

• firms may change their environmental practices for consumers

  • e.g Woolies committed to carbon neutral 2050, 100% renewables 2025