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commerce > Term 3: Microeconomics (Slides 4) > Flashcards

Term 3: Microeconomics (Slides 4) Flashcards

1
Q

What is microeconomics?

A

Microeconomics examines the operation of the smaller units that make up the economy.

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2
Q

What are microeconomic policies?

A

Microeconomic policies are government actions taken to:
- Improve productivity of industries
or markets
- Support competition
- Improve outcomes for consumers
- Increase employment opportunities

part of the government’s attempt to
satisfy as many wants as possible with limited resources.

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3
Q

What are examples of private sector wants?

A

cars, fashion, technology

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4
Q

What are examples of collective wants?

A

renewable energy, roads, schools

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5
Q

Microeconomic policies:

A

Microeconomic policies operate
within every role of government
with the intention to improve
living standards in society.

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6
Q

Microeconomic Policy Focuses (types of microeconomic policies):

A
  • trade liberalisation,
  • labour market reforms,
  • market deregulation,
  • national reform agenda,
  • contemporary australian policy (immigration and the environment)
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7
Q

How is trade managed?

A

The imposition of tariffs/quotas and the provision of subsidies helps protect local business from overseas competition.

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8
Q

What is a tariff?

A

a tax on imports that raise the price of imported goods.

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9
Q

Does Australia impose a lot of tariffs?

A

No, Australia has very few tariffs e.g. on vehicle parts and dairy.

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10
Q

What is a Quota?

A

A limit on imported goods.

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11
Q

What are some examples of quotas in Australia?

A

tobacco, types of cheese, HFC (hydrofluorocarbons)

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12
Q

What is a subsidy?

A

an amount given to local producers to help them lower prices and compete with cheaper imports.

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13
Q

What are some examples of subsidies in Australia?

A

dairy, agricultural products

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14
Q

What is trade liberalisation?

A

Trade liberalisation involves removing barriers to trade between different countries and encouraging free trade.

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15
Q

What is free trade?

A

Free trade is when there are no artificial barriers to trade between nations.

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16
Q

How is trade liberalisation achieved?

A
  • Cut tariffs
  • Reduce Subsidies
  • Abolishing Import quotas
  • Increasing Bi-lateral free-trade
    agreements
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17
Q

What are some negative impacts of trade liberalisation?

A
  • Australian manufacturers have
    struggled to remain competitive.
  • Labour reform policies have caused
    increased labour costs compared to
    overseas labour costs
  • Car industry has closed its doors in
    Australia.
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18
Q

What is the labour market?

A

The labour market regulates wages and working conditions.

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19
Q

How is the labour market regulated?

A

Includes the system of award and enterprise agreements as regulated by the Fair Work Commission.

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20
Q

What are some positives of deregulation of the labour market?

A
  • Workers paid more for increased
    productivity
  • Increased productivity means lower
    costs and more competitive prices.
  • Successfully competitive
    manufacturers will provide more
    employment opportunities
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21
Q

What are some negatives of deregulation of the labour market?

A
  • Loss of working conditions
  • Increased productivity usually
    means longer working hours.
  • More workers covered by Common
    Law contracts which may exploit
    vulnerable workers.
22
Q

What is Market Deregulation?

A

The removal of any unnecessary government controls, restrictions and supervision in various areas of the economy.

23
Q

What do economists believe about market deregulation?

A

Economists believe that markets will allocate resources most efficiently if left to manage themselves.

24
Q

What does efficient resource allocation lead to?

A

Efficient resource allocation leads to lower prices and stronger competition.

25
Q

What are collective wants?

A

goods and services for the use of the whole community.

26
Q

What government economic goals does market deregulation promote?

A
  • lower cost inflation (higher
    competition between firms)
    strong and sustainable economic
  • economic growth (higher demand -
    due to lowered prices)
  • higher employment (new job
    opportunities in previously blocked
    sectors)
  • external stability (more exports and
    less imports, locally produced
    goods become more price
    competitive)
27
Q

What are some negative impacts of market deregulation?

A
  • Loss of important collective wants
    due to high costs.
  • Reduced service provided by
    privatised companies to improve
    efficiency.
  • Conflict of interest between
    providing a service to the
    community and providing profits to
    shareholders.
28
Q

What are some examples of market deregulation?

A
  • Eastern suburbs bus services
  • South Australian Powerlines
  • Qantas
29
Q

What is the National Reform Agenda?

A

A collection of measures designed to strengthen the competition
and level of efficiency in product and service markets.

30
Q

What are some anti-competitive illegal practices under the competition and consumer act?

A
  • price fixing
  • exclusive dealing
  • collusive binding
  • predatory pricing
  • market zoning
31
Q

What is price fixing?

A

When firms collaborate to set common or similar prices that are higher than normal.

32
Q

What is exclusive dealing?

A

This occurs when companies refuse to supply their products or services to one or more firms.

33
Q

What is collusive binding?

A

This is when competing firms that are submitting a tender or quote for the completion of works or to supply goods or services meet secretly beforehand to agree whose tender should be most attractive, cheapest and likely to win the contract.

34
Q

What is predatory pricing?

A

This is when dominant firms conduct a price war involving big cuts in selling prices with the intention of driving rival firms bankrupt, then later enjoying the market without competition.

35
Q

What is market zoning?

A

This happens when competing firms in a region divide the market into zones, areas or regions within which they agree not to compete with each other over prices.

36
Q

What are environmental policies?

A

Environmental policies are policies with a focus on improving the quality of the environment.

37
Q

What are some examples of environmental policies?

A
  • Kyoto agreement 2008 & Paris agreement 2016 to reduce greenhouse gas emissions
  • National Home insulation to reduce power bills
  • Household rebates for solar panels and water tanks
  • Carbon Tax
38
Q

Identify the Microeconomic Tool from the headline:
‘Australia Post gets its books in order, privatisation feared’

A

Market deregulation.

39
Q

Identify the Microeconomic Tool from the headline:
‘Australia and China set for wine tariff tussle’

A

Trade liberalisation

40
Q

Identify the Microeconomic Tool from the headline:
‘How does the biodiversity offsets scheme work?’

A

Contemporary Australian policies.

41
Q

Identify the Microeconomic Tool from the headline:
‘Garuda ordered to pay $19m in ACCC air cargo cartel case’

A

National reform agenda.

42
Q

What is the unemployment rate formula?

A

unemployment rate = unemployed / labour force x 100

43
Q

How is the labour force calculated?

A

labour force = employed + unemployed

44
Q

What is the participation rate?

A

The proportion of people aged 15 or over employed or actively looking for work.

45
Q

What is the participation rate formula?

A

participation rate = labour force / working-age population x 100

46
Q

Groups in the labour market (working age population):

A
  • labour force
    • unemployed
    • employed
      - employed part-time
      - employed full-time
  • Not in the labour force
    - not looking for other reasons
    - retired
    - permanently unable to work
47
Q

What are the types of unemployment?

A
  • cyclical
  • structural
  • seasonal
  • frictional
48
Q

What is cyclical unemployment?

A

Cyclical unemployment is unemployment resulting from business cycle movements e.g. in a recession a business may require fewer workers resulting in people losing their jobs.

49
Q

What is structural unemployment?

A

Structural unemployment is unemployment because of a fundamental shift in the operation of society e.g. farming industry becoming more mechanised so less farmers needed.

50
Q

What is seasonal unemployment?

A

Seasonal unemployment is unemployment occurring between seasons e.g. ski instructor.

51
Q

What is frictional unemployment?

A

Frictional unemployment is working age people who are between jobs e.g. someone re-entering the workforce after a break.

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