Defenitions Flashcards
Regulatory capture
When someone who works in government moves job somewhere he may have an advantage
Trade union
an organized association of workers in a trade, group of trades, or profession, formed to protect and further their rights and interests.
Labour market
the availability of employment and labour, in terms of supply and demand
Economic growth
an increase in the amount of goods and services produced per head of the population over a period of time
Positive externalities
, a benefit received or transferred to a party as an indirect effect of the transactions of another party.
The cost on a 3rd party as an indirect effect of other parties
De merit good
A good or service which is seen as unhealthy, degrading or otherwise social undesirable
Public good
A commodity of the government which is non-rejectable, non-rivalrous and non rejectable
Quasi good
Has some charechteristics of a public good
Price mechanism
The process of how supply and demand affects prices
Signalling - if a price changes, it is a signal to the consumer to change
Rationing - refers to scarcity of resources and the most efficient way to use them
Incentives - encouraging firms to increase their level of output
Gig economy
A labour market which involves zero hour contract or short term work instead of a long term job
Market faliure
When the price mechanism fails to allocate scarce resources efficiently or when the operation leads to a net welfare loss
Types of market faliure
Externalities
Under-provision of public goods
Information gaps
Private costs definitions
The costs/benefits of the activity to society as a whole
Demand curve =private benefits
Supply curve = private costs
Merit goods
Goods or services that are seen as beneficial to individuals and society as a whole but are often under funded and under consumed
NHS. Education
Examples of government intervention
Indirect taxes and subsidies - taxes put on goods with negative externalities
Tradable pollution permits - a permit which limits the amount of pollution a firm can produce per year, can however sell excess permits or buy even more from other firms
Provision of the good - fund through taxes if the social benefit is very high
Provision of information- granting information since lots of externalities are from lack of information
Regulation - this could limit consumer goods with negative externalities eg : banning advertising of smoking
Free rider problem
Someone who receives a benefit from a public good without paying for it
Companies won’t invest in public goods due to a potential free rider problem
Symetric information
When buyers and sellers have access to the same information and there is perfect knowledge
Asymetric information
When one party has more info than the seller, usually the buyer than the seller, leading to them taking advantage
On the decline however with advancement of technology and advertising
Examples of information gaps u
Pension, young people don’t invest
Drugs, people don’t look at long time problems
Misallocation of resources
Due to imperfect information, there is a misallocation of resources and they are either under provided or over provided leading to not working at the equilibrium of supply and demand
What is the principle agent problem
When the interest of the principal- the person making the decision on behalf of the agent, isn’t alighted with of the agent, the person who is affected by the decision
For example a parent telling their kid what school they’re going to
Welfare loss
A decrease in economic and social wellbeing
If the cost exceeds the benefits
Occurs when the efficiency market quantity isn’t demanded and supplied
What are economic agents
Central banks, governments, buisenesses and individuals
Law of diminishing demands
The satisfaction derived from the consumption of additional unit of a good will decrease as more of a good is consumed
4 factors of productions and how do they create income
Land - rent
Labour- salary
Capital - divided profit
Enterprise- profits
Capital gains
When a product gains in value since it was brought
Market distortion
When the prices and production are different than normal due to normal in a competitive market due to intervention
When was Royal Mail fully privatised and why is it controversial
2016
Recently messed up leaking data when it was system’s fault but people got sacked and ended up killing themself
What did jeremy Corbyn labour want to do in 2019
re-nationalise Royal Mail, rail operating companies, energy supply networks and regional water and sewage
Examples of regulators
Ofgen
Ofset
Bank of England
Ofcom
Market forces
Economic factors that will determine the price and quality of goods or services in a market
Fiscal drag
Where inflation and earnings growth may push more taxpayers into higher tex brackets - show’s importance for government to change tax brackets
