A2 MICRO Flashcards
Policy indicator
Provides information on whether a particular policy is on course to achieved a desired objective.
Performance indicator
Provides information on what is happening in the economy.
Lead indicator
Provides information on the future state of the economy.
Lag indicator
Provides information about past events that have already taken place in the economy.
Production
the process of converting inputs into outputs.
Short run
A time period in which at least one factor of production is fixed.
Long run
the time scale in which all factors of production can be changed.
Profit
Total revenue minus total costs.
Welfare
Basically means human happiness.
Industrial policy
the government’s micro economic policy.
Firm
A business that sells output commercially on the market.
Company
an incorporated business enterprise.
Private company
Issues shares that aren’t for sale on the market.
Public company
Issues shares that the general public can buy on a market or stock exchange.
Multinational company.
A business with a headquarters in one country and operates subsidiaries abroad.
Law of diminishing marginal returns.
A short run law which states that as a variable factor is added to fixed factors eventually the marginal return from that variable factor will fall.
Fixed costs
Costs of employing fixed factors of production in the short run.
Variable costs
the costs of employing variable factors of production in the short run.
Returns to scale
Describes how output changes in the long run when all factors of production are variable. They are about the change in scale of a factor/s of production and the proportionate increase in output.
Economies of scale
Falling long run average costs as the size and scale of the firm increases.
Diseconomies of scale
Rising long run average costs as the size or scale of a firm increases.
Minimum efficient scale
The smallest scale plant that can benefit from the minimum long-run average costs.
Market structure
The framework within which a firm sells its output.
Pure monopoly
Exists when there is only one firm in the market.