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econs definitions > microeconomic decision makers > Flashcards

microeconomic decision makers Flashcards

1
Q

functions of money

A

medium of exchange, measure of value, store of value, standard of deferred payment

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2
Q

characteristics of money

A

SUPDAD
scarce, uniform, portable, acceptable, divisible

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3
Q

def central bank

A
  • provides bank services to gov and commercial banks
  • operates monetary policy
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4
Q

commercial banks

A
  • institution which aims to make a profit
  • by providing range of banking services to firms and households
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5
Q

disposable income

A
  • income left
  • after income tax has been deducted and state benefits received
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6
Q

functions of commercial bank

A
  • accept deposits
  • make loans
  • current accounts
  • creating/extending credit
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7
Q

rate of interest

A
  • charge for borrowing money
  • payment for lending money
  • reward for saving, cost of borrowing
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8
Q

what are categories of factors affecting choice of occupation

A

wage benefits, non wage benefits

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9
Q

what are the wage factors

A
  • salary
  • wages
  • bonus
  • commission
  • overtime pay
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10
Q

what are the non wage factors

A
  • family influences
  • job security (long contracts mean higher)
  • length of training required
  • job satisfaction
  • career prospects (clear pathway for advancement more desirable)
  • status
  • time/place
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11
Q

trade union

A

organisation that exists to represent the interest of workers

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12
Q

collective bargaining

A

representatives of workers negotiating with employers’ associations

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13
Q

industrial action

A
  • when workers disrupt production
  • to put pressure on employers to agree to their demands
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14
Q

primary sector

A

industries involved in the production or extraction of raw materials

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15
Q

secondary sector

A

industries involved in processing raw materials to manufacture a product

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16
Q

tertiary sector

A

industries which provide services

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17
Q

horizontal merger

A

firms in the same industry and at the same stage of production merge

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18
Q

vertical merger

A

firms in the same industry but at a different stage of production merge

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19
Q

conglomerate merger

A

firms in different industries and/or at different stages of production merge. firms that have completely unrelated business activities

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20
Q

functions of central banks

A
  • banker of gov
  • banker to commercial banks
  • lender of last resort
  • manages national debt
  • issues bank notes
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21
Q

limiting factors for choice of occupation

A
  • qualifications
  • skills
  • experience
  • geographical immobility
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22
Q

what increases demand for labour

A
  • increase in demand for product (labour is a derived demand)
  • rise in labour productivity
  • rise in p of capital
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23
Q

what causes supply of labour to decrease

A
  • fall in labour force
  • rise on qualification/training required
  • reduction in non-wage benefits
  • rise in wage or non-wage benefits in other jobs
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24
Q

why do primary sector workers earn less

A
  • less skilled, fewer qualifications
  • demand for primary sector workers decrease as economy develops
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25
Q

how to change earning of occupations

A
  • bargaining power
  • gov policy
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26
Q

what gov policies impact wage rate

A
  • min wage
  • change levels of gov spending on projects
  • immigration policies
  • promote new tech
  • improving education
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27
Q

determinants of elasticity of supply of labour

A
  • qualifications/skills required
  • length of training
  • level of employment
  • mobility of labour
  • time period
28
Q

determinants of elasticity of demand for labour

A
  • proportion of labour costs in total costs
  • ease to be substituted by capital
  • EOD for product produced
  • time period
29
Q

what is role of trade unions in economy

A

negotiate on behalf of members for
- wages
- job security
- working conditions
- protect workers rights

30
Q

types of industrial action

A
  • sit in
  • strike
  • work to rule
  • go slow
31
Q

+ of trade union activity for workers

A
  • no longer individual voice
  • better pay, working conditions
  • specialised job training
  • free legal advice
32
Q

+ of trade union activity for firms

A
  • more worker voice=higher motivation
  • less sick days, higher productivity, more profit
  • skill increases (training)
33
Q

+ of trade union activity for economy

A
  • solve disputes
  • fewer disruptions in economy= more attractive to intl investment
  • higher wages=better standard of living
  • higher wages= more income tax
34
Q
  • of trade union activity for workers
A
  • must follow union instruction even if disagree
  • strike action=lower pay
  • receive criticism
35
Q
  • of trade union activity for firms
A
  • meeting demands increases cost of production
  • management lose some control/power
36
Q
  • of trade union activity for economy
A
  • industrial action reduces output
  • strike action v disruptive
  • if economy known for strikes, decrease intl investment
37
Q

advantages of small firms

A
  • customer loyalty (word of mouth ad)
  • immediate feedback
  • personalisation
  • unique products for high price
38
Q

disadvantages of small firms

A
  • difficult to raise finance if more $ needed to expand
  • difficult to take holiday/sick
  • no economies of scale
  • difficult to retain staff
39
Q

types of causes of growth in firms

A

internal, external

40
Q

how internal growth in firm

A

use retained profits to help expansion & increase market share over time

41
Q

how external growth in firm

A

takeovers/mergers to rapidly increase size

42
Q

def economies of scale

A

decrease in ATC as firm increases scale of prodution

43
Q

def diseconomies of scale

A

increase in ATC as firm increases scale of production

44
Q

def internal economies of scale

A

cost savings firm is able to achieve by cutting costs of production as it grows

45
Q

eg internal economies of scale

A
  • purchasing
  • managerial
  • financial
  • marketing
  • technical
  • risk-bearing
46
Q

explain purchasing economy of scale

A
  • as firm increase output
  • suppliers provide volume-based discounts for raw materials purchased
47
Q

explain managerial economy of scale

A
  • as firm grows
  • can employ specialised managers
  • have skills to use resources efficiently
48
Q

explain financial economy of scale

A
  • commercial banks charge lower interest on loan
  • consider less risky
49
Q

explain marketing economy of scale

A
  • as output increases, marketing costs spread over more units of output
50
Q

explain technical economy of scale

A
  • can install machinery to lower costs of production
  • use existing machinery more efficiently
51
Q

explain risk bearing economy of scale

A
  • produce wide range of products
  • supply in many geo locations
  • reduce risk of failure for each section of firm
52
Q

def external economies of scale

A
  • occur outside firm but within industry in which it operates
  • as entire industry grows, creates benefits that help lower ATC
53
Q

egs of external economies of scale

A
  • access to more skilled workforce
  • investment in transport infrastructure by gov
  • training and edu relocate to serve industry better
54
Q

what is diseconomies of scale

A
  • when ATC increases as firm grows
55
Q

causes of diseconomies of scale

A
  • lack of coordination
  • miscommunication
  • lack of control
    (LOSS OF EFFICIENCY)
56
Q

what is fixed cost

A
  • cost of production
  • does not change with q of units produced
57
Q

what does diagram for fixed costs look like

A
58
Q

what is average fixed costs

A

cost per unit of output

59
Q

what does diagram for AFC look like

A
60
Q

def variable cost

A
  • cost of production
  • changes with q of units produced (directly related to production)
61
Q

diagram for VC

A
62
Q

def total costs

A

combined costs of production. FC + TVC

63
Q

how to represent FC + TVC = TC in diagram

A
64
Q

objectives of firsm

A
  • survival
  • growth
  • profit
65
Q

how to calculate total revenue

A

price * quantity sold

66
Q

how to calculate average revenue

A

TR/q

67
Q
A

econs definitions (3 decks)

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