Labour Market Definition Flashcards
Monopoly
A sole provider of a good/service. Legal Monopoly is where they have greater than 25% market share.
Allocative Efficiency
Consumer valuation is equal to the economic cost. Occurs when Price=Marginal Cost. P>MC more should be produced. P
Productive Efficiency
Combination of capital and labour in the most effective way, minimising their ATC. Producing at an output that coincides with the lowest point of a firm.
EOS Definition
The benefits to a firm of operating at an increased scale of production leading to reductions in average total cost.
Supernormal Profit
Profit in excess of normal
X-Efficiency
X-inefficiency happens when a lack of effective / real competition in a market or industry means that average costs are higher than they would be with competition
Natural Monopoly
Where it is most efficient to have one firm provide the good/service.
Minimum Efficient Scale
The lowest level of output at which full advantage can be taken of economies of scale.
Monopolistic competition
A market structure where firms have many competitor’s, but sell similar but not identical products.
Short Run Equilibrium
One factor which is fixed
Long Run Equilibrium
All factors are variable
Oligopoly
A market where there is a high market concentration ratio, a market structure dominated by a few large firms.
Kinked Demand (KD) Curve Definition
Follow price reductions but not price rises
Collusion Definition
A group of firms or an industry act together to to set prices/restrict output.
Game Theory
This is where the actions of firms play a role in the actions of the other firms in decision making and the implications of the decision in the future.
Purchasing EofS
When firms buy in bulk they can pay less for per unit purchased.
Selling EofS
A larger firm can make better use of sales and distribution facilities. Cinema’s in advertising campaigns run costs over a large output (Marketing EofS)
Technical EofS
A larger firm would be able to buy more high-tech and efficient equipment. Small cinema unlikely to open a huge multiplex, due to it being financially not viable.
Financial EofS
Find it easier/cheaper to raise finance. More likely to give money to a large well known cinema and often charge ower interest, buyers of shares as well due to well known.
Managerial EofS
With large firms they have more specialisation of employers, unlike small chains where few workers have more tasks to complete.
Risk Bearing EofS
Greater output can get greater range of products, reducing the chance of a loss, should one product be a failure. Cinema, big firms won’t be affected if they show a poor film, significant for small firm.
Market Structure definition
Level of competition in a market
LDMR
As each unit of a variable factor is increased to a fixed factor, output increases at first, then it will decrease and become negative, due to the restraints of that factor.
Marginal Product
The change in total product from employing one more variable factor.
