economics (topic 1) chapter 10-20

Question 1

Equilibrium

Answer 1

a position from which there is no tendency to change

Question 2

A market Equilibrium

Answer 2

situation in which the price is such that the quantity that customers want to buy is the same as supplied
demand and supply are equal

Question 3

excess demand

Answer 3

is a situation in which the price is such that the quantity demanded exceeds the quantity offered for supply.

Question 4

excess supply

Answer 4

is a situation in which the price is such that the quantity offered for supply exceeds the quantity demanded.

Question 5

joint demand

Answer 5

is a situation in which two or more goods or services are used together
e.g toothbrush and toothpaste

Question 6

demand for substitute

Answer 6

good that occurs when a good might be purchased as an alternative ti another good, for example, beef and pork are possible subsitutes.

Question 7

composite demand

Answer 7

occurs when a good is demanded for different purposes e.g milk can be demanded in order to provide milk, yogurt or cheese.

Question 8

derived demand

Answer 8

when the demand for one good is determined by the demand for another

Question 9

joint supply

Answer 9

occurs when the supply for one good automatically leads to the production of another good.
e.g lamb and wool

Question 10

another word for joint supply ?

Answer 10

complimentary supply

Question 11

productivity

Answer 11

measures the efficiency with which inputs are transformed into outputs

Question 12

labour productivity

Answer 12

measures the efficiency of the labour force

Question 13

four benefits of improved labour productivity?

Answer 13

better living standard
improved internatioanl competitvness
greater rewards to all factors of production
economic growth

Question 14

why is labour productivity a useful measure of efficiency?

Answer 14

easy to calculate are interpret
data is readily available
useful when comparing firms
it is objective and a useful way of comparing diffrent firms and factories
it can be measured in diffrent ways and can be adapted for diffrent purposess.

Question 15

why isn’t labour productivity a useful measure?

Answer 15

only focuses on a single factor
often misinterpreted as a casual link
output can be measured in diffrent ways and some may not be easily used for comparison
labour productivity ignores the cost of factors of production

Question 16

specialisation?

Answer 16

occurs when an individual firm, region, or country concentrates on producing a limited range of products.

Question 17

division of labour?

Answer 17

specialisation by individual workforce, breaking down production into many different tasks

Question 18

positives of division of labour?

Answer 18

-play to strengths, constantly improving
- produce more quickly thus improving production and productivity
-production line/conveyer belt system can be used

Question 19

negative effects of division of labour?

Answer 19

-low output as concentration is unattainable
-high absenteeism because workers might pretend to be ill
- poor quality as focus is lacking meaning mistakes might be made

Question 20

money

Answer 20

anything that is widely accepted in exchange for goods and services

Question 21

exchange

Answer 21

is the trading for good and services between sellers and buyers

Question 22

short run

Answer 22

is the time period in which its only possible to change the level of input of variable factors of production

Question 23

long run

Answer 23

is the time period in which it is possible to change the level of input of all factors of production.

Question 24

internal economies of scale

Answer 24

the advantages that an organisation gains due to an increase in its size
increase in productivity - decrease in costs of production

Question 25

external economies of scale

Answer 25

advantages that a organisation gains due to the growth in the size of an industry

Question 26

short run, simple definition

Answer 26

at least one factors of production is fixed

Question 27

long run

Answer 27

no factors of production are fixed

Question 28

total revenue or sales revenue

Answer 28

is the total money received from the sales of a firms goods and services , total revenue can also refure to the total money received from the sale of particle goods and services

Question 29

average revenue

Answer 29

average receipt of money for each good or service that is sold

Question 30

perfectly competitively market =

Answer 30

all firms charge the same price

Question 31

invisabilties of production process

Answer 31

means that in practice below a certain volume of output, its impossible to carry out certain types of production or to follow certain production techniques

Question 32

profit

Answer 32

profit is the difference between the total sales revue and a firms and its total costs

Question 33

profit maximisation

Answer 33

means making the highest possible level of profit.

Question 34

perfect compotition

Answer 34

describes a market structure in which there are many buyers and many sellers, there is freedom on entry into the market. -buyers and sellers all possess perfect knowlage and all firms supply identical goods.

Question 35

an oligopoly

Answer 35

market structure in which supply of goods is dominated by a few firms, barriers to entry into the industry - some knowlage is widespread, firms in oligopoly markets are likely to possess some knowlage that is not available to others

Question 36

monopolistic competition

Answer 36

describes a market structure in which there are many buyers and sellers, firms supply simular but diffrent goods. -there is freedom of entry into the market and freedom of exit out of the market -

Question 37

a monopoly

Answer 37

one firm supplying all the goods in the industry -barriers to entry -no perfect knowlage -monopolist is likely to possess all knowlage

Question 38

market share formular

Answer 38

sales of firms X divided by total sales x100

Question 39

survival

Answer 39

state of continuing to exist or avoide failure, a firms that will go into survival will go into liquidation or bankruptcy

Question 40

a price taker

Answer 40

a firm that has ti accept the equilibrium price set by the market in which it operates. any quantity of goods that it supplies will be sold at the market price

Question 41

main characteristics of a perfectly competitive market

Answer 41

many firms no product diffrientriation no barriers to entry perfect information and knowalge firms have no influence of price

Question 42

pure monopoly

Answer 42

exits when there is a single supplier in the market