1.2 BUSINESS ECONOMICS Flashcards
factors of production
resources used to produce goods and services, which include land, labour, capital and enterprise
production
process that involves converting resources into goods or services
human capital
value of the workforce or an individual worker
labour
people used on production
working capital or circulating capital
resources used up in production such as raw materials and components
fixed capital
stock of ‘man-made’ resources,such as machines and tools, used to help make goods and services
entrepreneurs
individuals who organise the other factors of production and risk their own money in a business venture
capital intensive
production that relies more heavily on machinery relative to labour
labour intensive
production that relies more heavily on labour related to machinery
primary sector/industry
production involving the extraction of raw materials from the earth
assembly plants
factory where parts are put together to make a final product
secondary sector/industry
production involving the processing of raw materials into finished and semi-finished goods
tertiary sector/industry
production of services in the economy
de-industrialisation
decline in manufacturing
productivity
rate at which goods are produced, and the amount produced related to the work, time, and money needed to produce them
job rotation
practice of regularly changing the person who does a particular job
piece rate
amount of money that is paid for each item a worker produces,rather than for the time taken to make it
division of labour
breaking down of the production process into small parts with each worker allocated to a specific task
specialisation
production of a limited range of goods by individuals, firms, regions or countries
costs
expenses that must be met when setting up and running a business
fixed costs (overheads)
costs that do not vary with the level of business
variable costs
costs that change when output levels change
total cost
fixed costs and variable costs added together
scale
size of a business
diseconomies of scale
rising average costs when a firm becomes too big
economies of scale
falling average costs due to expansion
internal economies of scale
cost benefits that an individual firm can enjoy when it expands
bulk buying
buying goods in large quantities, which is usually cheaper than buying in small quantities
external economies of scale
cost benefits that all firms in an industry can enjoy when the industry expands
competition
rivalry that exists between firms when trying to sell goods to the same group of customers
barriers to entry
obstacles that might discourage a firm from entering a market
innovative
commercial exploitation of a new invention
product differentiation
attempt by a firm to distinguish it’s product from that of rival
market niche
smaller market, usually within a larger market or industry
monopoly
situation where there is one dominant seller in a market
new entrant
company that starts to sell goods or services in a market where they have not sold them before, or one of these goods or services
price maker
where a dominant business is able to set the price charged in the whole market
patent
license that grant permission to operate as a sole producer of a newly designed product
natural monopolies
situation that occurs when one firm in an industry can serve the entire market at a lower cost thant would be possible if the industry were composed of many smaller firms
market segments
groups of customers that share similar characteristics, such as age, income, interests and social class
oligopoly
market dominated by a few large firms
interdependence
where the actions of one country or large firm will have a direct effect on others
price war
where one firm in the industry reduces price causing the others to do the same
niche market
market for a product or service, perhaps an expensive or unusual one, that does not have many buyers, but that may make good profits for companies that sell it
cartel
whee a group of firms or countries join together and agree on pricing or output levels in the market
value-added (products or services)
products or services have an increased value because work has been done on them, they have been combined with other products and so on; this increase in value to the buyer is what the buyer pays for
wage rate
the amount of money paid to workers for their services over a period of time (that is, the price of labour)
derived demand
demand that arises because there is demand for another good
labour mobility
easy with which workers can move geographically and occupationally between different jobs
boom
time when business activity increases rapidly, so that the demand for goods increases, prices and wages go up, and unemployment falls
boom and bust
when an economy regularly becomes more active and successful and then suddenly fails
closed shop
company or factory where all the workers must belong to a particular trade union
secondary picketing
workers in one workplace or company strike in a group at a particular location in order to support the striking workers in a different workplace or company
inflation
rate at which prices rise, a general and continuing rise in prices
anti-competitive practices (or restrictive trade practices)
attempts by firms to prevent or restrict competition
fit for purpose
usable (by a consumer) for the purpose for which it was intended
subsidiaries
companies that are at least half-owned by another company
minimum wage
minimum amount per hour which most workers are legally entitled to be paid
