microeconomic decision makers Flashcards
1
Q
functions of money
A
medium of exchange, measure of value, store of value, standard of deferred payment
2
Q
characteristics of money
A
SUPDAD
scarce, uniform, portable, acceptable, divisible
3
Q
def central bank
A
- provides bank services to gov and commercial banks
- operates monetary policy
4
Q
commercial banks
A
- institution which aims to make a profit
- by providing range of banking services to firms and households
5
Q
disposable income
A
- income left
- after income tax has been deducted and state benefits received
6
Q
functions of commercial bank
A
- accept deposits
- make loans
- current accounts
- creating/extending credit
7
Q
rate of interest
A
- charge for borrowing money
- payment for lending money
- reward for saving, cost of borrowing
8
Q
what are categories of factors affecting choice of occupation
A
wage benefits, non wage benefits
9
Q
what are the wage factors
A
- salary
- wages
- bonus
- commission
- overtime pay
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
11
Q
trade union
A
organisation that exists to represent the interest of workers
12
Q
collective bargaining
A
representatives of workers negotiating with employers’ associations
13
Q
industrial action
A
- when workers disrupt production
- to put pressure on employers to agree to their demands
14
Q
primary sector
A
industries involved in the production or extraction of raw materials
15
Q
secondary sector
A
industries involved in processing raw materials to manufacture a product
16
Q
tertiary sector
A
industries which provide services
17
Q
horizontal merger
A
firms in the same industry and at the same stage of production merge
18
Q
vertical merger
A
firms in the same industry but at a different stage of production merge
19
Q
conglomerate merger
A
firms in different industries and/or at different stages of production merge. firms that have completely unrelated business activities
20
Q
functions of central banks
A
- banker of gov
- banker to commercial banks
- lender of last resort
- manages national debt
- issues bank notes
21
Q
limiting factors for choice of occupation
A
- qualifications
- skills
- experience
- geographical immobility
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
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
24
Q
why do primary sector workers earn less
A
- less skilled, fewer qualifications
- demand for primary sector workers decrease as economy develops
25
how to change earning of occupations
- bargaining power
- gov policy
26
what gov policies impact wage rate
- min wage
- change levels of gov spending on projects
- immigration policies
- promote new tech
- improving education
27
determinants of elasticity of supply of labour
- qualifications/skills required
- length of training
- level of employment
- mobility of labour
- time period
28
determinants of elasticity of demand for labour
- proportion of labour costs in total costs
- ease to be substituted by capital
- EOD for product produced
- time period
29
what is role of trade unions in economy
negotiate on behalf of members for
- wages
- job security
- working conditions
- protect workers rights
30
types of industrial action
- sit in
- strike
- work to rule
- go slow
31
+ of trade union activity for workers
- no longer individual voice
- better pay, working conditions
- specialised job training
- free legal advice
32
+ of trade union activity for firms
- more worker voice=higher motivation
- less sick days, higher productivity, more profit
- skill increases (training)
33
+ of trade union activity for economy
- solve disputes
- fewer disruptions in economy= more attractive to intl investment
- higher wages=better standard of living
- higher wages= more income tax
34
- of trade union activity for workers
- must follow union instruction even if disagree
- strike action=lower pay
- receive criticism
35
- of trade union activity for firms
- meeting demands increases cost of production
- management lose some control/power
36
- of trade union activity for economy
- industrial action reduces output
- strike action v disruptive
- if economy known for strikes, decrease intl investment
37
advantages of small firms
- customer loyalty (word of mouth ad)
- immediate feedback
- personalisation
- unique products for high price
38
disadvantages of small firms
- difficult to raise finance if more $ needed to expand
- difficult to take holiday/sick
- no economies of scale
- difficult to retain staff
39
types of causes of growth in firms
internal, external
40
how internal growth in firm
use retained profits to help expansion & increase market share over time
41
how external growth in firm
takeovers/mergers to rapidly increase size
42
def economies of scale
decrease in ATC as firm increases scale of prodution
43
def diseconomies of scale
increase in ATC as firm increases scale of production
44
def internal economies of scale
cost savings firm is able to achieve by cutting costs of production as it grows
45
eg internal economies of scale
- purchasing
- managerial
- financial
- marketing
- technical
- risk-bearing
46
explain purchasing economy of scale
- as firm increase output
- suppliers provide volume-based discounts for raw materials purchased
47
explain managerial economy of scale
- as firm grows
- can employ specialised managers
- have skills to use resources efficiently
48
explain financial economy of scale
- commercial banks charge lower interest on loan
- consider less risky
49
explain marketing economy of scale
- as output increases, marketing costs spread over more units of output
50
explain technical economy of scale
- can install machinery to lower costs of production
- use existing machinery more efficiently
51
explain risk bearing economy of scale
- produce wide range of products
- supply in many geo locations
- reduce risk of failure for each section of firm
52
def external economies of scale
- occur outside firm but within industry in which it operates
- as entire industry grows, creates benefits that help lower ATC
53
egs of external economies of scale
- access to more skilled workforce
- investment in transport infrastructure by gov
- training and edu relocate to serve industry better
54
what is diseconomies of scale
- when ATC increases as firm grows
55
causes of diseconomies of scale
- lack of coordination
- miscommunication
- lack of control
(LOSS OF EFFICIENCY)
56
what is fixed cost
- cost of production
- does not change with q of units produced
57
what does diagram for fixed costs look like
58
what is average fixed costs
cost per unit of output
59
what does diagram for AFC look like
60
def variable cost
- cost of production
- changes with q of units produced (directly related to production)
61
diagram for VC
62
def total costs
combined costs of production. FC + TVC
63
how to represent FC + TVC = TC in diagram
64
objectives of firsm
- survival
- growth
- profit
65
how to calculate total revenue
price * quantity sold
66
how to calculate average revenue
TR/q
67
