Labour Market Definition

Question 1

Monopoly

Answer 1

A sole provider of a good/service. Legal Monopoly is where they have greater than 25% market share.

Question 2

Allocative Efficiency

Answer 2

Consumer valuation is equal to the economic cost. Occurs when Price=Marginal Cost. P>MC more should be produced. P

Question 3

Productive Efficiency

Answer 3

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.

Question 4

EOS Definition

Answer 4

The benefits to a firm of operating at an increased scale of production leading to reductions in average total cost.

Question 5

Supernormal Profit

Answer 5

Profit in excess of normal

Question 6

X-Efficiency

Answer 6

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

Question 7

Natural Monopoly

Answer 7

Where it is most efficient to have one firm provide the good/service.

Question 8

Minimum Efficient Scale

Answer 8

The lowest level of output at which full advantage can be taken of economies of scale.

Question 9

Monopolistic competition

Answer 9

A market structure where firms have many competitor’s, but sell similar but not identical products.

Question 10

Short Run Equilibrium

Answer 10

One factor which is fixed

Question 11

Long Run Equilibrium

Answer 11

All factors are variable

Question 12

Oligopoly

Answer 12

A market where there is a high market concentration ratio, a market structure dominated by a few large firms.

Question 13

Kinked Demand (KD) Curve Definition

Answer 13

Follow price reductions but not price rises

Question 14

Collusion Definition

Answer 14

A group of firms or an industry act together to to set prices/restrict output.

Question 15

Game Theory

Answer 15

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.

Question 16

Purchasing EofS

Answer 16

When firms buy in bulk they can pay less for per unit purchased.

Question 17

Selling EofS

Answer 17

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)

Question 18

Technical EofS

Answer 18

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.

Question 19

Financial EofS

Answer 19

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.

Question 20

Managerial EofS

Answer 20

With large firms they have more specialisation of employers, unlike small chains where few workers have more tasks to complete.

Question 21

Risk Bearing EofS

Answer 21

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.

Question 22

Market Structure definition

Answer 22

Level of competition in a market

Question 23

LDMR

Answer 23

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.

Question 24

Marginal Product

Answer 24

The change in total product from employing one more variable factor.

Question 25

Derived Demand

Answer 25

Demand for one item depending on the demand for another. Labour depends upon the revenue gained from what is being produced.

Question 26

MRP

Answer 26

The change in a firms revenue after employing one more labour unit.

Question 27

Income effect

Answer 27

The income effect states that a higher wage means workers can achieve a target income by working less hours. Therefore, because it is easier to get enough money they work less.

Question 28

Substitution effect

Answer 28

The Substitution effect states that a higher wage makes work more attractive than leisure. Therefore, supply increases.

Question 29

Pecuniary Factors

Answer 29

Wage rate and the opportunity of bonus’s and working overtime.

Question 30

Non Pecuniary Factors

Answer 30

Non monetary advantages/disadvantages of doing a job.

Question 31

Bargaining Power

Answer 31

Brain surgeons members of BMA, industrial action, significant consequences, brain surgeons cannot be replaced easily by capital. Waiters have low bargaining power, as few belong to a trade union, replaced easily.

Question 32

Economic Rent

Answer 32

The surplus over transfer earnings, and so is: (total earnings – transfer earnings)

Question 33

Transfer payments

Answer 33

What a worker could earn in their best paid alternative employment – the opportunity cost of performing the current job

Question 34

Unit Labour Costs (ULC)

Answer 34

The cost of labour per unit of output.

Question 35

Monopsony

Answer 35

They are the sole buyer of labour in the market and can exploit their bargaining power to reduce costs.

Question 36

Geo Immo of Labour Definition

Answer 36

The level of freedom that workers have to relocate in order to be able to find employment.

Question 37

Occu Immo of Labour Definition

Answer 37

The ease to which workers can switch career fields in order to find employment.