1.2 Business Economics Flashcards
1
Q
Benefits of division of labour for workers
A
- More skilled (higher wages, easier to get employed)
- High satisfaction (highly skilled in a specialised task, higher wages)
2
Q
Drawbacks of the division of labour for workers
A
- Work becomes boring (leads to job dissatisfaction)
- Workers can find it harder to get employed because they are too specialised
3
Q
Benefits of the division of labour for businesses
A
- Higher productivity (less mistakes)
- Production is easier to organise
4
Q
Drawbacks of the division of labour for businesses
A
- Higher absence rates (job dissatisfaction)
- Loss of flexibility and a chain reaction is caused if a specialist worker is not present
5
Q
Internal economies of scale
A
- Technical
- Risk-bearing
- Managerial
- Marketing
- Financial
- Purchasing
6
Q
External economies of scale
A
- Skilled labour
- Infrastructure
- Availability of suppliers
- Similar firms in the area
7
Q
Diseconomies of scale
A
- Alienation/distance between senior management and shop floor-level workers
- Bureaucracy
- Communication problems
- Lack of control
8
Q
Features of competitive markets
A
- Large number of buyers and sellers
- Products are close substitutes
- Low barriers to entry
- Price takers
- Free flow of information
9
Q
Advantages of competition to consumers
A
- Lower prices
- More choice
- Better quality
10
Q
Disadvantages of competition to consumers
A
- Market uncertainty
- Less innovation (less profit, cut costs to lower prices to win over consumers)
11
Q
Advantages of competition to firms
A
- More innovation
12
Q
Disadvantages of competition to firms
A
- Lower profits
- Less innovation
13
Q
Advantages of competition to the economy
A
- Increased efficiency
- More innovation
14
Q
Disadvantages of competition to the economy
A
- Wastage of resources
- Lack of innovation
15
Q
Features of oligopolies
A
- Few firms
- Large firms dominate
- Differentiated products
- High barriers to entry
- Collusion
- Price competition
- Non-price competition
- Exploitation of economies of scale
16
Q
Advantages of oligopolies to consumers
A
- Wider choice
- Higher quality
- Innovation
- Lower prices (Economies of Scale)
- Non-price competition (loyalty programs, member discounts etc.)
17
Q
Disadvantages of oligopolies to consumers
A
- Collusion (higher prices and less choice)
- Barriers to entry (less choice)
- Price competition (lower quality and less choice)
- Non-price competition (higher prices, lower quality and less choice)
18
Q
Advantages of oligopolies to firms
A
- Higher profits (EoS, collusion)
- More innovation
19
Q
Disadvantages of oligopolies to firms
A
- Lower profits (price wars)
- Less innovation
20
Q
Advantages of oligopolies to the economy
A
- Efficiency
- Wider choice
- Lower prices
21
Q
Disadvantages of oligopolies to the economy
A
- Inefficiency/market failure
- Less innovation
22
Q
Advantages of small firms
A
- Flexibility
- Personalised service
- Lower wage costs (no trade unions)
- Better communication
- Innovation
23
Q
Disadvantages of small firms
A
- Higher costs
- Lack of finance
- Difficulty attracting quality staff
- Vulnerability
24
Q
Advantages of large firms
A
- Lower costs (economies of scale)
- Ability to attract skilled labour
- Higher profits (market domination)
- Large-scale contracts (that are often highly profitable)
25
Disadvantages of large firms
- Too bureaucratic
- Hard to control
- Poor motivation
- Communication problems
26
Factors influencing the growth of firms
- Government regulation
- Access to finance
- Economies of scale
- The desire to spread risk
- The desire to take over competitors
27
Reasons firms stay small
- Size of the market
- Nature of the market
- Lack of finance
- Aims of the entrepreneur
- To avoid diseconomies of scale
28
Factors affecting the demand for labour
- Demand for the product
- Availability of substitutes
- Productivity of labour
- Other employment costs
29
Factors affecting the supply of labour
- Population
- Age distribution
- Female participation
- Migration
- Retirement age
- School leaving age
- Skills and qualifications
- Labour mobility
- Attractiveness of job
30
Advantages of increases in minimum wage for workers
- Higher standards of living (higher purchasing power from higher wages)
- Higher job satisfaction (more motivation from higher wages)
31
Disadvantages of increases in minimum wage for workers
- Unemployment (as wage costs rise and firms have to cut costs and lay them off) OR
- Unemployment (as wage costs rise and firms increase prices which causes demand to fall and demand for labour to fall because labour is a derived demand)
32
Advantages of increases in minimum wage for firms
- Higher productivity (higher motivation from higher wages)
33
Disadvantages of increases in minimum wage for firms
- Higher wage costs
34
Advantages of increases in minimum wage for the economy
- Higher standards of living
- Higher consumption (higher purchasing power from higher wages)
- Increased efficiency (higher productivity from more motivation from higher wages)
35
Disadvantages of increases in minimum wage for the economy
- Higher unemployment (firms may not be able to afford the increase in wage costs)
- Lower economic growth (less spending due to higher unemployment)
36
Advantages of trade union activity for workers
- Higher job satisfaction (better working conditions)
- Higher standards of living (higher purchasing power from higher wages)
37
Disadvantages of trade union activity for workers
- Unemployment
38
Advantages of trade union activity for firms
- Higher productivity (more motivation from better working conditions/higher wages)
39
Disadvantages of trade union activity for firms
- Higher wage costs
40
Ways the government can promote competition
- Encourage the growth of small firms
- Lower barriers to entry (remove legal barriers)
- Introduce anti-competitive legislation (and regulations and/or fines)
- Government investigations
41
Reasons for a minimum wage
- Benefits disadvantaged workers (increases their standards of living)
- Saves money for the government (less welfare benefit payments)
- Higher worker productivity (from more motivation)
42
Reasons against a minimum wage
- Higher unemployment
- Businesses will close (due to higher costs that they can’t afford)
- Young people will lose their entry-level job opportunity
- Inflation (businesses pass higher labour costs onto consumers)
