For example, a farmer must decide what to grow on her available land. Does she grow apples or avocados? Then she must decide how to produce the crops. Does she grow organic crops, use high-tech machinery or hire workers to harvest the fruit? And who will she sell her fruit to? A supermarket chain, direct to consumers at a farmers’ market or to cafes and restaurants? These questions are summarised in FIGURE4 .
SkillBuilder discussion Investigating 1. Think of and list some of the weird and wonderful things that you can buy.
FIGURE4 Australia’s economic system answers the three economic questions through the market.
What to produce? The market makes most decisions about the types and quantities of goods or services to be produced. Businesses will produce the goods and services that consumers want or need.
2. How do you think
businesses decide on what to produce? 3. Do you think that there are products that shouldn’t be produced at all? What might these be?
For whom to produce? The market determines who will get the goods and services produced by businesses. For example, people earn money by working for businesses. High-income earners will be able to buy more goods and services.
How to produce? The market helps to make decisions about the production methods that
businesses use to make goods or services. Businesses aim to make profit. Every business will attempt to make its
products using the cheapest method.
Being an active participant Being an active participant in the economy involves more than just having employment or managing a business. It includes making informed decisions that affect both individual financial well-being and the wider economic context. Employment, business operations and everyday financial choices and planning all play a role in maintaining the stability and growth of the economy. Active participation can be seen through various roles: as an employee contributing labour and skills; as a business owner fostering innovation and job creation; and as a consumer whose spending patterns shape market trends. Financial literacy is essential in these roles, as it enables informed decision-making and an understanding of the implications of those decisions. Key issues in Australia Australia faces several important economic and business issues that impact our daily lives. One key issue is the complexity of the tax system. Navigating through various tax obligations can be challenging for individuals and businesses, and understanding tax regulations is essential for compliance and financial planning. Simplifying the tax system and providing clear guidance can help improve financial literacy and ease the burden on taxpayers.
TOPIC20 Economics and Business concepts and skills 589
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