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Economics EDEXCEL IGSCE > 1.2 Business Economics :Unit 17 - Unit 21 > Flashcards

1.2 Business Economics :Unit 17 - Unit 21 Flashcards

1
Q
  1. What do you mean by “scale”?
A

size of the business.

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2
Q
  1. What is economies of scale?
A

it is the falling in average costs due to expansion.

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3
Q
  1. What is diseconomies of scale?
A
  • rising average costs when a firm becomes too big.
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4
Q
  1. What is internal economies of scale?
A

cost benefits that an individual firm can enjoy when it expands.

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5
Q
  1. What are the 7 types/ reasons for economies of scale?
A
  • Purchasing economies.
  • Marketing economies.
  • Technical economies.
  • Financial economies.
  • Managerial economies.
  • Risk-bearing economies.
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6
Q
  1. What is bulk buying?
A
  • buying goods in large quantities, which is usually cheaper than buying in small quantities.
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7
Q
  1. What is external economies of scale?
A
  • cost benefits that all firms in an industry can enjoy when the industry expands.
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8
Q
  1. What are the 4 reasons to external economies of scale?
A
  • Skilled labor
  • Infrastructure
  • Access to suppliers
  • Similar business in the area.
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9
Q
  1. What are the 4 reasons to diseconomies of scale?
A
  • Bureaucracy.
  • communication problems.
  • Lack of control.
  • Distance between senior staff and shop floor workers.
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10
Q
  1. What is competition?
A
  • rivalry that exists between firms when trying to sell goods to the same group of customers.
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11
Q
  1. What are the barriers to entry?
A
  • obstacles that might discourage a firm from entering a market.
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12
Q
  1. What are 5 common features to competitive markets?
A
  • large number of buyers and sellers.
  • products sold by each firm are close substitutes for each other.
  • Low barriers to entry
  • Almost no control over price charged.
  • Free flow of information about the nature of products.
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13
Q
  1. How do firms compete with other competitors in the markets?(4)
A
  • keeping costs as low as possible.
  • providing good quality products with high levels of customer services.
  • charging prices that are acceptable to customers.
  • Innovating by constantly reviewing and improving the product.
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14
Q
  1. What do you mean by innovative?
A

commercial exploitation of a new invention.

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15
Q
  1. What is production differentiation?
A

attempt by a firm to distinguish it product from that of rival.

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16
Q
  1. What is the main disadvantage in competitive markets?
A

lower profit.

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17
Q
  1. What are the 3 advantages of competition to consumers.
A
  • Lower prices.
  • More choice.
  • Better quality.
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18
Q
  1. What are the 2 disadvantages of competition to consumers?
A
  • market uncertainty
  • Lack of innovation
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19
Q
  1. What are the advantages of competition to the economy?(3)
A
  • Resources will be allocated more effectively in order to survive.
  • They are more innovative.
  • Better standard of living.
20
Q
  1. What are the disadvantages of competition to the economy?(2)
A
  • Resources may be wasted due to factors of production may be immobile,
  • People are made redundant.
21
Q
  1. Name 3 methods the size of a firm is measured.
A
  • turnover
  • Number of employees
  • Balance sheet total(amount of money invested int he business)
22
Q
  1. Name 5 advantages to small firms.
A
  • Flexibility.
  • Lower wage costs.
  • Personal service.
  • Better communication
  • Innovation
23
Q
  1. Name 4 disadvantages to being a small firm.
A
  • higher costs.
  • Lack of finance.
  • difficult attracting quality staff.
  • vulnerability.
24
Q
  1. Name 3 advantages to large firm.
A
  • economies of scale.
  • market domination.
  • large-scale contracts.
25
Q
  1. Name 3 disadvantages to a large firm.
A
  • too bureaucratic.
  • coordination and control.
  • poor motivation.
26
Q
  1. What are the 5 factors influencing the growth of firms?
A
  • government regulation.
  • access to finance.
  • economies of scale.
  • the desire to spread risk.
  • the desire to take over competitors.
27
Q
  1. What is a market niche?
A
  • smaller market, usually within a large market or industry.
28
Q
  1. What are 5 reasons a firm stays small?
A
  • size of the market.
  • nature of the market.
  • Lack of finance.
  • aims of the entrepreneur.
  • diseconomies of scale.
29
Q
  1. What is a monopoly?
A
  • monopoly is a situation where there is one dominant seller in a market.
30
Q
  1. What are the 4 features of a monopoly?
A
  • one business dominates the market.
  • unique product.
  • price maker.
  • barriers to entry.
31
Q
  1. What is a new entrant?
A
  • 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.
32
Q
  1. What is price maker?
A
  • where a dominant business is able to set the price charged in the whole market.
33
Q
  1. What are the 5 barriers to entry?
A

-legal barriers.
- patent.
- marketing budgets.
- technology.
- High start-up costs.

34
Q
  1. What are natural monopolies?
A
  • situation that occurs when one firm in an industry can serve the entire market at a lower cost than would be possible if the industry were composed of many smaller firms.
35
Q
  1. What are the 3 advantages of monopoly?
A
  • efficiency.
  • innovation.
  • economies of scale.
36
Q
  1. What are the 4 disadvantages of monopoly?
A
  • higher prices.
  • restricted choice.
  • lack of innovation.
  • inefficiency.
37
Q
  1. What are market segments?
A

groups of customers that share similar characteristics, such as age, income, interests and social class.

38
Q
  1. What is an oligopoly?
A

market dominated by a few large firms.

39
Q
  1. What are the 7 features of oligopoly?
A
  • few firms.
  • large firms dominate.
  • different products.
  • barriers to entry.
  • collusion.
  • non-price competition.
  • price competition.
40
Q

What is a collusion?

A
  • informal agreements between firms to restrict competition.
41
Q
  1. What is interdependence?
A

where the actions of one country or large firm will have a direct effect on others.

42
Q
  1. What is a price war?
A

where one firm in the industry reduces price causing others to do the same.

43
Q
  1. What is a niche market?
A

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.

44
Q
  1. What are the 5 advantages of oligopoly?
A
  • choice.
  • quality.
  • economies of scale.
  • Innovation.
  • Price wars.
45
Q
  1. What is a cartel?
A

cartel is where a group of firms or countries join together and agree on pricing or output levels in the market.

46
Q
  1. What are the 2 disadvantages of oligopoly?
A
  • Lack of choice.
  • Pay a higher price due to restricted competitions.

Economics EDEXCEL IGSCE (13 decks)

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