behavioural Flashcards
What is production
Output
What is productivity?
Rate of output
What is the formula for productivity?
Total output/number of units of labour
What is productivity defined as?
The output per unit of input employed
What is division of labour?
Breaking the process down into a sequence of tasks, with workers assigned to particular tasks
What does increased productivity do to average costs
Lowers average costs
What are the advantages of division of labour?
Replace labour with machinery
Lower labour costs
average costs
greater producivity
What are the factors affecting labour productivity?
Technology
Training
Wages
Infrastructure
Motivation
What are the advantages of specialisation?
-become better
-better quality and higher quantity
-more efficient production - more output
-reduced training costs
What is marginal utility
The (addition to the total) additional welfare gained from consuming one extra unit of a good.
What are the disadvantages of specialisation?
Boredom
Countries become less self sufficient
What is specialisation?
A worker only performing one task or a narrow range of tasks. Also different firms specialising in producing gs and s
What are the functions of money
A measure of value
A store of value
A standard of deferred payment (payed at later dates)
What is money
A medium of exchange
How do we measure welfare
GDP/per capita
Consumer surplus
HDI
What is utility maximisation
rational individuals seek to allocate their resources (money or time) in a way that maximizes their total utility.
What is behavioural economics?
A method of econ analysis that applies psychological insights into human behaviour to explain how individuals make choices and decisions
What is bounded rationality
Making irrational choices because of limitation of info, cognative abilities, time whilst making decisions
What is bounded self control?
Limited self control in which individuals lack the self control to act in what they see as their self interest.
What is satisficing?
Achieving a satisfactory outcome instead of the best outcome
What is cognative bias
Rule of thumb - a rough method that can be applied when making decisions
What is social norms?
Forms or patterns of behaviour considered acceptable by a society or grouo within that society
What does rational mean?
Maximise self utility
How is availibility a bias to decision making
Occurs when individuals make judgements about the likelihood of future events according to how easy it is to recall examples of similar events
How is anchoring a bias to decision making?
Human tendency to rely on the first piece of information
What is altruism
Charity
Not maximising self benefit
What is choice architecture?
A framework setting out different ways in which choices can be presented to consumers and the impact of that presentation on consumer decision making
What is loss aversion?
Peoples tendency to avoid making losses to acquire potential gains
What are nudges
Try to alter ppls behaviours in a predictable way without forbidding any options or significantly changing economic incentives
What is a default choice?
An option that is selected automatically unless an alternative is specified
What is mandated choice?
People are required by law to make a decision etc picking whether to be an organ donor
What is restricted choices?
Offering people a limited number of options so that they are not overwhelmbed by the complextity of the situation
