Definitions Flashcards
productivity
output per unit input
how efficiently a firm/economy is producing its output
free rider problem
one a public good is provided it is impossible to stop someone who hasn’t paid from benefiting from it
eg road cleaners
concentration ratio
the collective market share of the largest firms in the industry
pure public goods
non excludable
non rival
non excludable
the benefits of consuming the good cannot be confined to the individual that has paid
non rival
q of the good does not diminish upon consumption
pure public goods eg
armed forces
flood defence
roads
road signs
traffic lights
street lights
+/- externalities
benefits/costs to 3rd parties as a result of the actions of a separate agent in the production or consumption of a good/service
human capital
how valuable a person is in the workforce due to their education, training and experience
marginal cost of labour
cost of hiring an additional worker
in PC market MCL=market eqm W
monopsony
market w a single buyer
collective bargaining
where a tu negotiates w an employer on the individuals’ behalf
specialisation
concentration of production on a narrow range of goods/services
dynamic efficiency
reinvestments of LR SN profit to increase efficiency
gov failure
when the costs of gov intervention outweigh the benefits of gov intervention leading to a greater misallocation of resources and a net social welfare loss
behavioural econ
looks at social, psychological and emotional factors on the individuals in an economy
MC
cost of increasing output by one unit
only affected by VC
law of diminishing marginal utility
for each additional unit of a good consumed the marginal utility gained decreases
elasticity of labour d curve
measures the responsiveness of labour demanded given a change in wage rate
TU
an organisation which represents the interests of a group of workers
AR
average revenue per unit sold
productive efficiency
using up all FoPs to their max level
on the ppf
producing at the lowest point on the SRAC curve (AC=MC)
regulation
a rule/law enacted by gov that must be followed by economic agents to encourage a change in their behaviour
deregulation
gov reduce/remove legal barriers to entry in an industry
P mechanism
change in d/s of a g/s leads to a change in p leading to a change in q bought/sold until d=s
specific taxes
fixed amount charged per unit no matter what cost
allocative efficiency
optimal distribution of g/s taking consumer preferences into account
p=mc and d=s
tragedy of the commons
private producers act according to their self interest and unsustainably keep exploiting CAR until eventually leading to a depletion of that resource
bureaucracy
enforcement of rules + regulations by gov
Public private partnership
private firm works w gov to provide a service/build something
monopoly power
ability of a firm to influence the p of a particular g/s in a market
economic activity
combining the FoPs to create outputs that people can consume
production
manufacturing something in order to sell it
cost benefit analysis
decision making tool accounting for the SC and SB of a project over time to establish a ne present value
law of diminishing returns
if one variable fop increases while others stay fixed eventually mp from the variable factor will decrease
return to scale
how output changes when all factor inputs increase by the same proportion
dumping
sale of a good below costs of production in other countries
Mp
The additional output produced by adding one more unit of a factor not
Cross subsidisation
Using profit making parts of business to subside loss making parts allowing them to remain available to consumers
Margin
Change in one variable caused by an increase of one unit of another variable
Discrimination
The unjust different treatment of diff categories of people
