Economics mock Flashcards
Define privatisation
The act of selling a company or activity controlled by the government to private investors
Effects of privatisation on consumers
Pros: Competition may result in lower prices
Con: Prices may rise due to private firms seek to gain profit
Effect of privatisation on businesses
Pros: May encourage new firms to join the market as private firms may not have enough resources
Con: Private firms may dominate the market and gain huge profits
Definition of external costs
Negative spillover effects of consumption or production - they affect third parties negatively
Definition of external benefits
Positive spillover effects of consumption or production - they bring benefits to third parties
Examples of external costs
Pollutions, environmental damage, congestion
Examples of external benefits
Vaccinations, Education, Healthcare
Formula for social costs
Private costs + External costs
Formula for social benefits
Private benefits + External benefits
Definition of productivity
Rate at which goods are produced, and the amount produced in relation to the time, work and money needed to produce them
Factors affecting productivity
Land, labour, capital
What are the internal economies of scale
Technical economies
Marketing economies
Managerial economies
Purchasing economies
Risk bearing economies
Financial economies
What are the external economies of scale
Skilled labour
Access to suppliers
Infrastructure
Similar businesses in the area
Factors affecting demand for labour
Demand for the final product (Derived demand)
Productivity of workforce
Availability of substitutes
Factors affecting the supply of labour
Population size
Migration
Retirement age
School leaving age
Female participation
Skills and qualification
Ability to move geographically
Age distribution of population
