Economics

Chapter 1
1. Define Economics, Opportunity Cost, Factors of Production and PPC
Economic is the study of how society choose to allocate scarce resources to production of
goods to satisfy unlimited wants
Opportunity cost is the best alternative sacrificed for a chosen alternative
Production Possibility Curve is the curve showing maximum combinations of two outputs
that an economy can produce, given available resources and technology
2. What are the assumptions made when constructing PPC?
Fixed resources Resources base cant vary during time period
Fully employed resources
Technology unchanged Technology means body of knowledge applied to products remains
unchanged
3. What do the following point shown in Fig1 mean?
A: Unattainable points
B: Efficient possible points which showed maximum output possibility
C: Attainable but inefficient points
4. What is ceteris paribus assumption?
Ceteris Paribus assumption means while certain variables change, all other factors remain
unchanged
5. What are direct, inverse and independent relationships?
Direct means two variable changes in same direction. Eg. Demand
Inverse means opposite. Eg. Supply
Independent means related. Eg. Perfectly Elastic
6. What is law of increasing opportunity costs?
Opportunity cost increases as production of one output expands
7. What may cause when shifting PPF?
Changes in resources
Technological changes
8. Define planned, market and mixed economy.
Planned means government accepts responsibility for all major economic decisions
Market means Private individuals and big firms accepts responsibility for all major economic
decisions with minimum government intervention
Mixed means operating price mechanism within framework of government control

Economics

Chapter 2
9. What is total and marginal utility and diminishing marginal utility?
Total utility is total satisfaction gaining from all those units of a good consumed within a period
Marginal utility is additional satisfaction gaining from consuming an extra unit of a good within
a period.
Diminishing marginal utility means since person become more satisfied, each extra unit
consumed will give less additional utility than previous ones. Marginal utility decrease as
consumption rises.
10.
Explain Law of Demand and Supply
The law of demand/supply means the inverse/direct relationship between the price and the
quantity demanded/supplied, ceteris paribus. A market demand/supply is the horizontal
summation of individuals.
11.
Explain Price and non-price factors
Price factors cause changes in quantity demanded/supplied while non-price determinants
cause whole demand/supply, quantity d/s means shifting along curve while d/s means shifting
of whole curve.
12.

List and explain non-price determinants of demand and supply

Demand
Supply
Number of buyers
Number of buyers
Tastes
Technology
Normal goods
Input prices
Inferior goods
Taxes and subsidies
Expectations of buyers
Expectations of sellers
Substitute goods
Price of other goods and
services
Complementary

13.
Explain connection between diminishing marginal utility and demand curve
Due to law of diminishing marginal utility, people buy less in higher prices and buy more in
lower prices. This cause the inverse relationship in demand curve
14.
Explain Demand and supply schedule
The demand/supply schedule is a table of quantity demanded/supplied of a good at different
price levels
15.
Why equilibrium is efficient?
Since equilibrium means that society maximises the benefits from limited resources. The
market is clear and no unsatisfied customers and wasted resources
16.
Define normal, inferior, substitute and complementary goods
Normal/inferior goods are g/s have direct/inverse relationship between income and demand
Substitute goods are g/s competes with another g/s for consumer purchases, have direct
relationship between price changes in g/s and demand in competing g/s
Complementary goods are g/s jointly consumed with another g/s, have inverse relationship
between price changes in g/s and demand in complement g/s

Economics

Chapter 3&5
17.
Define Price Mechanism
Its a system that uses the force of supply and demand to create equilibrium through rising
and falling prices
18.
What are surplus and shortage?
Surplus/shortage means quantity supplied is greater/less than quantity demanded at any price
19.
Explain price ceilings and price floors. Whore responsible and whatre the solutions? (Fig2)
Price ceilings/price floors are maximum/minimum prices set by law to prevent the forces of
supply and demand determining prices in market.
If a price ceiling/price floor is set below/above equilibrium price, a shortage/surplus will persist.
The government can do rationing to make sure everyone can consume and remove the
shortage
The government can restrict production by using mandated quotas or businesses
incentives
20.
Explain the disadvantages and solutions of market mechanism (Fig 3)
Inequality, since ability for individuals to consume depends upon income, it may lead to a
distribution of income that is undesirable and unacceptable. Government can offer welfare
system.
No public goods, since no production due to free rider problem. Government can produce by
using tax.
Positive/Negative externality is cost/benefit imposed not on buyers/sellers. Pollution and
immunisation. Government can offer taxes/subsidies and regulations.
Misallocation means not allocating the resources at maximum. Government can do price
ceiling/floors
Lack of competition, monopolist restricts the supply to market. Government can set
legislations.
21.
Define public goods, rivalry, exclusion and black market
A product that users collectively consume benefits and cant prevent people without paying
consuming
Rival means buying a g/s means it cannot then be consumed by anyone else
Excludable means those who buy enjoy the benefit and those who do not are excluded
Black market means the illegal trading when shortage as price ceilings, people may sell at
equilibrium price
22.
Why do governments interfere in the free working of the price mechanism?
Government objectives - Redistribution of income, the reallocation of resources, correcting
economic instability
23. Explain the role of market economy for the fundamental questions
Definition
Market Economy
What
What goods and services will be produced in
Consumer sovereignty
How
Profit motive
what quantities
much
How
The decision of about the resources mix for
Price and profit motive

Economics

For
whom

production.
The division of output among societys
citizens

Income earned determines

Economics

Chapter 4,6,7
24.
Define price elasticity
Goods differ in degree to which quantity bought responds to changes in each respective price
25.
Explain price elasticity of demand and supply, what are the determinants?
PED/PES is the ratio of the percentage change in the quantity demanded/supplied to its price
PED
PES
Availability of substitute
Time required for production
Availability of inputs
Necessity goods
Luxury goods
Price compared to total income

Excess capacity
Storability

26.
Explain variations of price elasticity of demand (Fig 4)
On a straight line demand, above/below mid-pt is elastic/inelastic. Mid-pt is unitary that
maximised revenue
27.
Explain cross elasticity and income elasticity of demand
CED/IED is the ratio of the percentage change in the quantity demanded to other
goods/income
CED>0/<0 means substitute/complement goods because numerator and denominator
move same/different direction(s)
28.
What is tax incidence?
It means the share of tax ultimately paid by consumers or producers
Move of demand/supply means tax paid by consumers/producers
29.
Explain explicit and implicit costs
Explicit cost is payment to non-owner of the firm for their resources
Implicit cost is opportunity cost of using resources
30.
What are economic, normal and accounting profits?
Economic profit = Total revenue (Implicit + Explicit cost)
Accounting profit
= Total revenue Implicit cost
Normal profit
= Economic profit = 0
31.
What are short run and long run?
Short/long run means therere some/no fixed costs and some/all are variable
32.
What is law of diminishing returns?
Short run concept because there must be fixed input
*Beyond some points, marginal product decrease since additional variable factor
added to fixed factor
33.
Explain productivity. How to improve productivity?
Productivity is the output per unit of time per worker
Increase in capital intensiveness
Improved management
Scale Effects
Competitive pressure
New Ideas
Research and innovation

Economics

Economics
34.
Explain specialisation. List advantages and disadvantages.
Focuses on producing limited scope of products to increase productivity
Advantages
Disadvantages
Save time
Too repetitive
Reduce workload
Need new skill acquisition if obsolete
Utilise workers abilities
Workers will be interdependent
Greater volume and variety of goods
More output with less resources
35.
What are the alternative goals of firms?
Profit satisficing Gain minimum profit and share dividends
Sales and growth Maximisation Increase monopoly power
Long run profit maximisation
36.
Explain takeovers and mergers, horizontal, vertical integration and diversification
Merger means joining together of two or more firms under common ownership
Takeover means one company wish to buy another company
Horizontal means merger of two firms in same line of production process
Vertical means merger of two firms that either supply raw materials or sell finished products
Diversification means merger of two firms in produce different products
37.
Explain TFC, TVC, TC, AFC, AVC, ATC, MC, LRAC (Fig 5)
TFC is the cost of inputs that dont change as firm changes output in short run
TVC is the cost of variable input used in production at each level of output
Average means divided by total output at each level of output
MC is the change of total cost when theres addition unit of output
LRAC means curve of tangent to all possible SRATC
38.
Explain increasing/decreasing returns and economies/diseconomies/constant economies of
scale
Returns means short term while economies of scale means long term situation
Internal means firm specific, or caused internally, while external occur based on larger
changes outside of the firm.
39.
Explain factors of economies and diseconomies
Economies
Diseconomies
Increasing of division of labour
Chain of command lengthened,
bureaucratic
Specialisation
Greater efficiency of capital
40.
What is total profit maximisation?
MC=MR. Since MR is straight and MC is first increased then decreased due to law of
diminishing returns. MC</>MR means the profit is still rising/starts dropping. MC=MR is
optimum pt where maximised profit.
41.
Explain Barriers to entry, market structure and market concentration
Barriers to entry means the factors which make it difficult or impossible to enter industry
Market structure means the classification for characteristics of a market, including
a. Number of firms
b. Similarity of the products
c. Ease if entry into and exit fro the market

Economics
Market concentration means the degree that the output of an industry dominated by
producers

Economics

Chapter 8,10
42.
Explain homogeneous product
Homogenous product means all products are identical, buyers are indifferent to which
product they buy
43.
Sketch and explain supernormal profit of short run and long run of perfect competition (Fig
6)
Hence, explain short and long run equilibrium
Supernormal profit in short run but normal profit in long run
Short run equilibrium means MC(S)=D; long run means MR=SRMC=SRAC=LRAC due to
normal profit
44.
Explain demand curve in perfect competition
AR=MR=D. Because price is same for all products, MR is the price of product, which is the
demand
45.
Distinguish between individual market and market demand
Market demand is the equilibrium price and individual demand is perfectly elastic of market
demand
46.
Why firm continue when suffering loss in short run. When will they close down?
Still covering fixed costs. AVC > (MR=MC)
47.
Why MC curve determined as supply curve and AR=D?
MC curve indicates the firm to find the output level where profit is maximized
AR is TR divided by quantity sold, and the price and quantity are both taken from
the demand curve
48.
Explain price maker, taker and non-price competition
Maker means choosing price and output mix along demand, taker means no control/choose
price (Only PC)
Non-price competition means try to distinguish product from basis of attributes like design,
only PC cant

Chapter 10
49.
Explain product differentiation and market power
Product differentiation means process of creating real or apparent differences between
products
Market power is the ability to profitably raise the market price of a product over marginal
cost
50.
Sketch and explain supernormal profit of short run and long run of monopolistic
competition (Fig 8)
Hence, explain short and long run equilibrium
Supernormal profit in short run but normal profit in long run (LRAC=D, above MR=MC)
Short run equilibrium means MC=MR at D curve; long run means AR=LRAC due to normal
profit

Economics
51.
Explain the effect of advertisement
Advertisement makes demand curve increase and become inelastic (Increased loyalty)
Pros
Cons
Show characteristics of products
Mislead/persuade consumers buying
unnecessary goods
Stimulates product development
Counter productive if sales isnt increased
Firms increase output and achieve
Increased loyalty means less competition
economies of scale

Chapter 9
52.
What are the regulations of monopoly
Price regulation marginal cost pricing, subsidy or quit if fail
Government regulations 1. Profit control Fair or marginal
2. Restore competition (against collusion, restrict monopoly
formation)
3. Nationalisation or create public enterprise for competition
4. Allow private firms
53.
What is privatisation? List advantages and disadvantages
Privatisation means the transfer of activities from public (Government owned or run) to private
sector
Advantages
Disadvantages
1. More efficiency as profit motive
May reduce services with less profit
2. Risk transferred from tax to owners
Job losses if owner cut cost and improve
efficiency
3. More efficiency as specialisation
They concern profit from expense of public
service
4. Short term revenue for government by
selling
54.
Explain why public utilities may be regarded as natural monopolies (Fig 7)
As LRAC declines through entire output, one firm can supply entire market at lower cost than
two or more
55.
Explain barriers of monopoly (9)
(2) Control of raw material and distributive outlets
(7) Economy of scale, Capital, Legal, (forefront) Technological, Product Differentiation,
threatened conduct (price war) barrier, Access to cheaper inputs (Due to market position)
56.
Sketch and explain supernormal profit of short run and long run of Monopoly (Fig 9)
Supernormal profit in short and long run
57.
Explain price discrimination. When can monopoly offer price discrimination?
Price discrimination means different charges to different customers but not justified by cost
differences
1. Seller must be price maker
2. Must able to segment market by distinguishing that consumers willing to pay at different
prices
3. Impossible or costly to arbitrage (Earn profit by reselling)

Economics
58.
Why monopoly earns SNP in long run?
Factors determining demand and cost curves shows profit, and no disturb (high barriers for
entry)
They can alter its plant size to lower cost. If long run loss, liquidation of resources to make
profit
59.
List the advantages and disadvantages of monopoly and oligopoly
Advantages
Disadvantages
Lower price can do profit maximisation
Misallocation of resources
SNP can do innovation and R&D

Reduction in Competition, negatively

affect customers
Distortion of income, income from
consumers

Economics

Chapter 11
60.
Sketch and explain supernormal profit of short run and long run of oligopoly (Fig 10)
Supernormal profit in short and long run
61.
Explain concentration ratio and mutual independence, how they apply in oligopoly market
structure?
Concentration ratio means the percentage of total sales in the industry generated by its
largest firm
In Oligopoly, small numbers of firm dominate, means decision by single large firm affects
overall market
Mutual Independence means the condition when action by one may cause reaction of
others
62.
Explain Kinked demand curve
Oligopoly demand assumed that rivals would match a price decrease but ignore a price
increase
63.
Explain the limitations of demand in oligopoly
Fail to find price stickiness, not intended to provide complete explanation of price and output
decision
64.
Explain collusion. Is it legal, why?
Collusion means rival companies cooperate for mutual benefit. Collusion SR&LR =
Monopoly graph
Usually no, it creates unfair market place by controlling supply or price, so its done secretly
65.
What are the obstacles to collusion?
Demand and cost differences
Number of firms
Cheating (Secret concession)
Recession (Decreased D cause increase ATC), as
differ revenue
66.
Define price leadership and cost-plus pricing
Price leadership means leaving rivals with little choice but to follow and match prices to
market share Competitors may lower prices to gain market share as discounters.
Cost-plus means determine price by adding a percentage markup to a product's unit cost
67.
Explain the cartel, game theory, duopoly, price leadership and Payoff Matrix
Cartel means group of firms formally agreeing to control the price and the output of product,
reaping monopoly profits by raising prices and restricting output, but may cheat
(Fig 11)
Game theory means analysing strategic decisions when each outcome depends on the
behaviour of others
Duopoly means oligopoly structure characterised by only two sellers
Price leadership is the price behaviour under oligopoly. When dominating firm changes
price, others follow
Payoff matrix means the way to examine the interaction between oligopoly firms. 2 firms, 2
prices, 4 profits
68.

What is the difference between gentlemens agreement and cartel?

Economics
Informal agreement but legal and formal statement but illegal
69.
Discuss some of the methods an oligopolist could use to increase market power. (5
marks)
Product differentiation, non price competition, price wars to eliminate competition, take overs
and mergers, creation of barriers to entry, collusion; other.
70.
Define all markets
1.Market structure
2.No. of
sellers
Perfect competition Large
Monopolistic
Large
competition
Oligopoly
Few
Monopoly

One

3.Type of product
Homogenous
Differentiated
Differentiated/
homogenous
Unique

4.Entry
conditions
Very easy
Easy

5.Example
s
Crops
Boutiques

Barriers

Cars

Extremely
difficult

Public
utilities

Chapter 12
71.
Explain
Efficiency
Productiv
e
Allocative
Dynamic

allocative, productive (technical) and dynamic efficiency

Definition
Firm produces lowest per unit cost at minimum ATC,
technical optimum
Resources turn to product that most wanted by society,
MC=P or D=S
Development of efficient production technique over time

Efficient
Perfect Competition
Perfect Competition
IPC (Debatable)

72.
Why dynamic efficiency of IPC is debatable?
Yes
No
SNP innovation
Monopolistic Competition no SNP
Product differentiation
Price stability and collusion for oligopoly
Strong non-price competition between
No incentive for monopolist to improve
firms
performance
73.

List the comparison, advantages and disadvantages of Perfect and Imperfect competition
Perfect competition
Comparison to
Monopolist set high cost and less Q, under allocate product
Monopolist
Advantages
More efficient of price and allocation
Disadvantages
Income inequality

74.
List and explain all competition policies
Competition Policy Government promotes competition by prohibiting and regulating anticompetition
Industry Policy Government action affecting structure, conduct and performance of industries
Trade Practices act Set code of behaviour that any reducing competition practices illegal
Government Intervention
Reduce spill over cost and increase benefit
Provide public goods, price ceilings and floors

Economics
75.
List the anti competitive trade practices (9)
Collusion, price agreement, market sharing, collusive bidding and tendering, resale price
maintenance, exclusive dealing, monopolisation, collective boycott
76.

Explain role of microeconomic policy

Reduce government intervention, increase

Pressure firms increase productivity and
competition
productive efficiency
Pressure firms pass benefits to customers
Lower price leads to improved allocation
Increased competition increase dynamic
efficiency
Raise economic growth rate and increase flexibility, increase three efficiencies by:

Accounting
1. Transaction
An event that alters financial position of business and requires entering information into
accounting records
2. Book keeping and accounting
Bookkeeping is part in accounting, only records transactions. Accounting includes economic
activities, financial position
3. Cash basis, accrual basis
Cash based on the recognition of revenues and expenses when cash is received or paid
Accrual
earned or incurred even if money is not being received or paid
4. Accounting Cycle
Source documents
captures details of transaction
st
Journal (1 book of entry) (6 specialised)
Record transactions into journal
Ledger (2nd book of entry)
contains all accounts, posts and classifies into
relevant accounts
Trial Balance
summaries all Dr/Cr balance from ledgers
Reports
P&L contains information about the R&E of the business,
hence P&L
BS shows assets, liabilities and owners equity
Analysed to assess profitability, liquidity, solvency and
management effectiveness of the business
Reported to interested parties for decision-making
5. Double entry accounting
Applied when recording information into accounts, system of recording transactions whereby
For every debit entry, theres a corresponding credit entry
6. Revenue expenditure and capital expenditure
Revenue expenditure would have to be deducted from income at the time they occur but capital
expenditure can be spent over years. Meaning far less effect on current earnings.
7. Expanded accounting Equation (A=L+C+P)
Shows relationship between balance sheet and the income statement, R&E has effect on BS
Assets
Items of value a business owns
Liabilities
What business owes
Owners equity
Total investment of the owner in the business
Revenues
Income of the business
Expenses
Resources consumed in process of ordinary course of generating revenue for
the business
8. Current and non-current
Current asset
Easily converted into cash or consumed within one year, or its life, use
up in one accounting year.
Current liability
Paid in full within one year of the balance date.
Non-current liability
Remain in the business account for a period greater than one year.
9. The rationale may include:
Aware liquid assets availability paying debts, finance investments and purchases
Required by regulations
For clear presentation and ease of reading
10.
Essential requirements
Clarity
Reasonably informed users can comprehend their meaning
Accuracy
Information corresponds with actual underlying transactions and events

Accounting
Capable of independent verification and free from bias
Consistency Able to identify similarities and differences between current and previous
reports
Timely
Prepared in plenty of time for people requiring the information to make
decision
Compliance Comply with accounting regulations and standards
11.
Accounting conventions
Monetary convention
All information described in dollar terms (L) Inflation,
management cant measured
Accounting entity
Separate financial affairs of accounting entity from other activities
Going concern
Assumed business is set up to continue indefinitely, assets
assumed to be used
Historical cost
Assets valued at original price purchased
Accounting period
Life of business split into regular intervals so performance can be
measured
Matching and recognition Expenses have match against revenue of same period to calculate P&L
accurately
12.
Dual Aspect or double entry convention
Each transaction has two aspects, both of which will affect the accounting equation
13.
Chart of accounts
List all the accounts in general ledger under A, L, OE, and R&E groups
Easy identification and sorting of accounts
14.
Steps of balancing account
1. Find total of both sides
2. Find the difference
3. Place difference in smaller total side
4. Total for both sides
5. Balance brought down to opposite side of c/d
15.
All journals (6 Specialised)
Pros Reduce bulk of details and errors in ledger
Sales journal record sales of trading goods on credit
Sales returns journal record returns of good sold
Purchases journal - record purchases of trading goods on credit
Purchases returns journal record returns of good purchased
Cash receipts journal record all cash received
Cash payments journal record all cash paid
16.
Limitations of Trial balance
Error of original
Both sides of a transaction include the wrong amount
Error of omission Transaction is completely omitted from the accounting records
Error of reversal
Entries are made to the correct amount, but with debits instead of credits
Error of commission
Entries are made to the wrong account of the correct type
Error of principle As error of commission, but the wrong type of account is used
Compensating errors
Multiple unrelated errors that individually lead to imbalance, but
together cancel each other out
17.
Internal Control
All measures guarding against errors, waste and fraud
Aid efficient operation and encourage compliance with company policies

Accounting
Accounting Control accounting functions
Protect assets and reliability of data
Authorisation and separation of recordkeeping duties from duties of custodian of
assets
Administrative
Business procedure
Increase operation efficiency and compliance with policies
Guidelines Clearly establish lines of responsibility
Internal auditing
Separate recordkeeping and custodianship

Accounting
18.
Bank reconciliation
Explain the difference between the bank balances shown in an organization's bank statement
19.
Summary of document flow
1. (Requisition)
2. Order forward supplier
3. Delivery docket and invoice
4. Purchases returns
5. Credit/debit notes
6. Statement
7. Remittance advice and cheque
8. Receipt
20.
Subsidiary ledger
Debtor / Creditors Contains accounts of individual D/C, total value is in related control accounts
in general ledgers
Advantages
Keep accurate details of each individual debtors and creditors
Maintain overdue accounts, control over payments
Avoid general ledger too cumbersome, simplify trial balance
21.
Other transactions recorded in general journal
Opening entries commence business
Buy or sell non-current assets
Interest charging
Drawings (stocks)
Bad debts
Correction of errors Omission
Transposition error
Entries to wrong journals and ledgers
`
Contra
22.
Analysis and interpretation of financial statement
Profitability Net profit ratio
Management efficiency or sales efficiency,
Management efficiency Stock turnover
How products sold, overstocking? Liquidity, price
Solvency Debt equity ratio
Geared business of not, risk
Liquidity Current ratio
Money for investment

Management

Management

Art and science to accomplish individual and organisational goals through efforts of individual and

groups using POLC

Planning -

Define goals for future organisations performance and deciding on the tasks and resources need to

be achieved
A goal - is desired state that the business or organisation attempts to realise
Smart - Acronym, Gives structure and weight to your goals, should be easy to understand
Achievable, Have a clear point of success
Specific is when you state or write exactly what you want to accomplish
Measurable means must be able to demonstrate and evaluate that goal is achieved
Achievable Goals should be challenging but achievable, must fit in with key responsibilities
Relevant means the goals must fit in with key responsibilities
Time-Bound Specific time frame in which the goal is to be achieved
Levels - Strategic, Tactical, Operational - (2-5 y or more, 1-2 y, daily to six monthly),
Uses framework of vision or mission, Implement Strategic Plan, Operational planning
Undertaken by senior, middle, front line management
Action Plan -

Lists specific steps (how), people (who), resources (what) and time periods (when) to

accomplish goals
Mission -

Statement of the purpose of a company, organisation or person, reason for existing, guide

action, overall goal and path

Efficiency vs

Perform or function in best possible manner with the least waste of time and effort

Effectiveness

Adequate to accomplish a purpose; producing the intended or expected result

Organising -

Co-ordinations of the various humans and physical activities of an organisation

Team

Forming -

Team meets and learns opportunities and challenges, agrees goals and begins

Storming -

Tolerance of each team member and emphasize differences; otherwise the team

tackle tasks
Development
will fail
Bruce Tuckman Norming

Team members take responsibility and have ambition to work for success of team's

goals
Performing - They are motivated and knowledgeable, competent, autonomous and able to
handle the
decision-making process without supervision.
Adjourning - Involves completing the task and breaking up the team
Steps in

Identify problem

Rationing

Generate solutions

(problem definition, goal definition, information gathering).

encloses two to three final solutions and preliminary

implementation
Model

Generate alternatives

evaluative criteria are measurements to determine success and

Evaluate alternatives

comprises final solution and secondary implementation to the site

Choose best alternative

final implementation and preliminary monitoring of the outcome

failure

and results
Implement decision secondary and final monitoring of the outcomes and results of the site
Evaluate decision

modify decisions and actions taken

Fault decisions Anchoring and adjusting bias

Availability bias

When rely too heavily on one single information or number

When information is easy to access and more readily available or

recently published heavily

Escalation of commitment

Continually following a course of action even is clear not ideal

Overconfidence

People overestimate ability to predict future

solution

Satisficing

Management

Choosing first available alternative rather than seeking best possible

solution
Problems in teams

Social loafing

Tendency of individuals putting less effort

Have job description, assign task for each with deadlines

Dominant team members

Have dominant personality limit others

Allocate specific time limit to be heard and encourage participation

Team conflict

Disagreement, difficult to overcome if exist before forming

Develop rules of conduct and private mediation

Group think

Desire for harmony cause poor decision

Using brainstorming to rational decision making model and

generate

Management

Leading-

Influencing staff to do what an organisations, business or teams want done

It is the process of directing and co-ordinating both dayto-day tasks and those specific tasks
required to allow the achievement of the organisations objectives
Leadership -

Ability to influence or motivate people to achieve some end or goal

Traits -

Desire to lead, Honesty and Integrity, Self-Confidence, Emotional Stability, Cognitive Ability,
Knowledge of the Business

Leader vs -

Leaders inspire people, build relationships, innovate and take risks, provide a vision, focus on

people
Manager

Managers enact the plan, provide and allocate resources, reduce risks, rely on Controls,

focus on things
Styles

Autocratic - make the decision alone without necessarily involving employees in decision-making

process
Pros and Cons
Each three

Democratic - employees participate in the decision-making, but leader has the final say

Laissez-faire - leave employees alone to make decision; minimum guidance and involvement in

the decision
Situational - no single best leadership, is one who can adopt different leadership styles depend
on situation
Factors Motivation -

Workers, the decision, the leader, the environment

Forces either within or external to a person that arouse enthusiasm and persistence to pursue

action
Maslow

Human beings are motivated by unsatisfied needs

Theory basis-

Lower needs must be satisfied before higher needs are met

There are general types of needs (physiological, safety, love and esteem)
These general needs must be satisfied before a person can act unselfishly
We are moving towards growth, and self-actualisation
Physiological needs - Most needs have to do with survival physically and psychologically
Safety needs -

People need to feel free from threat of physical and emotional harm

Social needs -

Include love, affection and belonging needs, relate to interaction with

others
Esteem needs -

Internal needs e.g. self-respect and achievement

External needs e.g. social status and recognition

Self-actualisation XY -

Healthy individuals prime motivation

Describe two different workforce motivations and explain workers behaviours between extremes
Maslows conversion: Lower order needs (Theory X); higher order needs (Theory Y)

X (Autocratic)- Assumes employees are naturally unmotivated and dislike working, desire only monetary rewards
Must be controlled, forced and threatened to deliver what's needed, closely supervise
Jobs must be clearly structured, many layers of management and supervision to control workers
Y (democratic

Assume self-motivated and creative, enjoy and seek responsibility, motivated by self-fulfilment,

or laissez-faire) involved in decision making, appreciating is regular and important, creative and innovative are
accepted
Controlling -

Monitoring all management processes

`Ensures the realisation of organisation or team objectives

Scientific

(A)

Develop science for each individual work task, technique developed by science and used

by workers
Management - Divide work equally and with managers planning and workers performing to achieve goals
Pros expectations

Specialisation and division of labours improve productivity, clearly defined authority, workers clear

Cons -

Management

Reduce labour productivity, centralized decision makes no input from employees, limited scope of

innovation
Behavioral (D+L)

More concern with employee well being, encourage management approaches considering

employees motivated
Management Focus approach on individual, group motivation and leadership, individual labour is crucial meeting
goals
Pros

Greater job satisfaction, labour productivity, less conflicts, employees interest align with goals

Cons

Popular decision override best decision, inefficient waste valuable time and resources,

inexperienced inefficiency