economics 2 Flashcards
factors determining price elasticity of supply
Productivity
Substitutes
Stock
Spare capacity
Time lag
what is the difference between internal, and external growth
Internal Growth
expansion of a company’s operations from within, through the development of new products, services, or processes, and by increasing sales and market share.
External Growth
expansion of a company through mergers, acquisitions, partnerships, or joint ventures with other companies. It involves gaining access to new markets, customers, or resources by partnering or acquiring other firms.
MC=?
@TC/@Q
ATC=?
AVC+AFC or TC/Q
what costs occur in the short run?
fixed and variable costs
what costs occur in the long run?
only variable costs
what is the difference between fixed and variable costs?
variable costs change with output, fixed costs do not
TR=?
P*Q
AR=?
P
MR=?
@TR/@Q
why does PED change along the demand curve?
because as price takes up more of income, demand becomes more inelastic
normal profit is…
AR=AC
subnormal profit is…
AR<AC
abnormal profit is…
AR>AC
what are the 6 economies of scale
I -innovation
F -financial
R -risk bearing
A -advertising
M-managerial
P -purchasing
what does LRAC do for natural monopolies
always goes down
ways to reduce inequalities
-progressive taxation
-rent caps
-trade liberalisation
-reduced VAT
-investment
how is unemployment measured?
surveys
types of unemployment
-seasonal
-cyclical
-structural
how to increase LRAS
-investment in infrastructure
-subsidies
the taxation argument
analysis:
(republic of ireland)
=less tax=higher profits=more re-investment
=greater technical economies of scale=dynamic pricing
=lower prices
diagram
evaluation:
may not re-invest=no technical economies of scale
=no lower prices+less government revenue=opportunity cost
cutting benefits
analysis:
cut to benefits=less money for unemployed
=reduction in income for unemployed=more motivation=
reduction in unemployment=reduction in inactivity rate
evaluation:
assumes lack of motivation+could be lack of skills
=cut to benefits would reduce access to education
=less able to get skills=even harder to get a job
=less likely to reduce inactivity
childcare
analysis:
more childcare=less stay at home parents=more time=
more likely to get a job=reduction in unemployment=
reduction in inactivity
evaluation:
takes time=time lag=no short term impact=costs money=
opportunity cost=limited impact
