Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Economics A2 > Revision Unit: 3 > Flashcards

Revision Unit: 3 Flashcards

1
Q

Absolute Poverty

A

A state where a household or person is unable to purchase the basic necessities to sustain a civilised life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Allocative Efficiency

A

Where resources are used to produce what consumers actually want to buy i.e. where resources are allocated such that no consumer could be made better off without another consumer becoming worse off

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Average Cost

A

The cost per unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Average Revenue

A

The revenue per unit of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Collusion

A

Where firms agree not to compete on price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Competition Policy

A

Government efforts to ensure firms do not exploit monopoly power

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Concentration Ratio

A

The market share of the 5 largest firms in an industry

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Consumers Surplus

A

Measures of consumer welfare: the maximum price a consumer is willing to pay for a good minus the market price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Contestable Market

A

An industry where there are no significant barriers to entry or exit (no sunk costs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Cost Benefit Analysis

A

Technique to assess whether public sector projects are likely to produce net gains in welfare to society

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Cost Plus Pricing

A

Where firms set price at average cost plus a profit margin, without explicit reference to estimated demand curve

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Deadweight Loss

A

Net welfare loss from not producing at social optimal production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Deregulation

A

Removal of government regulations to allow the entry of private sector firms to compete in a market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Derived Demand for Labour

A

Means labour is only demanded because of the output it can produce and not because firms want workers in their own right

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Diseconomies of Scale

A

The rise in unit cost as a firm expands its scale of production in the long run

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Dynamic Efficiency

A

Occurs when resources are allocated efficiently over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Elasticity of Demand for Labour

A

The responsiveness of demand for labour to a change in wage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Elasticity of Supply of Labour

A

The responsiveness of supply of labour to a change in wage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Fixed Costs

A

A cost which is independent of output in the short run

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Horizontal Equity

A

The equal treatment of people in the same circumstances

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Human Capital

A

The ability of workers to add value to production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Income Effect

A

The increased demand for leisure by an individual worker as wage rates rise because workers regard leisure as a normal good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Innovation

A

The ability to turn an invention into a marketable product or production process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Internal Growth

A

Self-financed growth of a company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Kinked Demand Curve
Demand curve facing an oligopolist which is relatively price elastic if price is raised but relatively price inelastic if price is reduced
26
Law of Diminishing Returns
The fall in marginal product that eventually results as additional units of the variable factors of production are added to the fixed factors
27
Limit Pricing
Where existing firms attempt to prevent new entry by pricing low so that new entrants will not make normal profits
28
Long Run
Period of time when all factors of production are variable
29
Marginal Cost
The addition to total cost from producing an extra unit of output
30
Marginal External Benefit
The additional (external) benefit to third parties from an extra unit of production
31
Marginal External Cost
The additional cost suffered by the third part from an extra unit of production
32
Marginal Private Benefit
The additional benefit to the consumers from an extra unit of production
33
Marginal Private Cost
The addition to total cost to the firm from an extra unit of production
34
Marginal Revenue
The addition to total revenue from producing an extra unit of output
35
Marginal Revenue Product
The addition to total revenue from employing an extra worker
36
Marginal Social Benefit
The additional benefit to society from an extra unit of production
37
Marginal Social Cost
The additional cost to society (i.e. firm + third party) from an extra unit of production
38
Market for Corporate Control
The competition for control of companies through takeovers
39
Means Tested Benefits
Benefits which are only paid to households who can prove they are poor
40
Merger
Joining of two previously separate firms into one
41
Minimum Efficient Scale
The lowest output at which a firm can produce at the lowest unit costs possible for the given technology
42
Monopsony
Single buyer in a market
43
National Collective Bargaining
Where trade unions negotiate for wages and working conditions which must apply to its workers throughout the country
44
National Minimum Wage
A floor below which wages cannot legally fall
45
Non-Price Competition
Where firms attempt to make more profit without cutting price
46
Normal Profit
The minimum (accounting) profit which the entrepreneur needs to stay in long term production
47
Oligopoly
A market dominated by a few firms
48
Optimal Tax
Tax equal to marginal external cost (persuading profit maximising firms to choose socially optimal production)
49
Participation Rate
Proportion of those of working age who are in paid jobs or seeking them
50
Perfect Competition
Market structure where there are very many buyers and sellers such that no individual can buy or sell at any price other than the going price
51
Population of Working Wage
The school leaving age to retirement age
52
Poverty Trap
The disincentive to work when someone on benefits faces a very high effective marginal rate of tax if they start work
53
Predatory Pricing
A short run strategy where a firm undercuts rivals on price to below cost
54
Price Discrimination
Where a firm sells identical products at different prices to different buyers
55
Privatisation
The sale of state-owned industries to the private sector
56
Producer Surplus
Measure of producer welfare: the surplus of market price received over the minimum price the producer would be prepared to accept
57
Productive Efficiency
Where goods are produced at the minimum possible average cost
58
Productivity
Output per factor input
59
Profit Maximisation
Price and output are chosen to maximise supernormal profit
60
Regulation
Rules from government requiring firms to modify their production techniques, output or price
61
Regulator
Government agent responsible for setting maximum price and ensuring against abuse of monopoly power by those companies who face limited competition in product markets
62
Regulatory Capture
where a regulated firm achieves softer regulation
63
Relative Poverty
A state where a household or person is significantly poorer than the average for the rest of society
64
Replacement Ratio
The ratio of unemployment benefits to average earnings
65
Revenue Maximisation
Price and output are chosen to maximise total revenue
66
Sales Maximisation
Price and output are chosen to maximise sales volume
67
Satisficing
Managers aim to make a satisfactory profit
68
Short Run
Period of time when at least one factor of production is fixed
69
Socially Optimal Production
Output where Allocative efficiency is maximised
70
Substitution Effect
The fall in demand for leisure by an individual worker as wage rates rise because leisure becomes more expensive in terms of opportunity cost
71
Sunk Costs
A cost which cannot be recouped on exiting the industry
72
Super Normal Profit
Profit in excess of normal profit
73
Tradable Permit
A legal right to pollute a fixed amount which can be bought or sold between firms
74
Trade Unions
An organisation of workers financed by membership fees which aims to further the interests of its members (e.g. negotiating with management to improve wages and working conditions, a trade union may be a monopoly seller of labour
75
Variable Costs
A cost which is related to output produced in the short run
76
Vertical Equity
The notion which can be used to justify taxing richer people more to bring about greater 'fairness'
77
Wealth
The value of an individual's assets at a point in time
78
Workforce
All those of working age either in paid jobs or seeking them

Economics A2 (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions