Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics Key Definitions (Year 13) > Theme 3: Business Behaviour and the Labour Market > Flashcards

Theme 3: Business Behaviour and the Labour Market Flashcards

1
Q

Allocative efficiency

A

When resources are allocated to the best interests of society, when there is maximum social welfare and maximum utility; P=MC

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

Asymmetric information

A

Where one party has more information than the other, leading to market failure and causing problems for regulators

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

Average cost

A

The cost of production per unit ​

total costs /quantity produced

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

Average revenue

A

The price each unit is sold for ​

TR/quantity sold

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

Monopoly

A

Where there is only one buyer and one seller in the market

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

Cartels

A

A formal collusive agreement where firms enter into an agreement to mutually set prices

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

Collusion

A

Occurs when firms agree to work together, for example by setting a price or fixing the quantity they produce

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

Competition policy

A

Government action to increase competition in markets

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

Competitive tendering

A

When the government contracts out the provision of a good or service and invites firms to bid for the contract

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

Conglomerate integration

A

The merger of firms with no common connection

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

Constant returns to scale

A

Output increases by the same proportion that the inputs increase by

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

Contestable market

A

When there is the threat of new entrants into the market, forcing firms to be efficient

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

Decreasing returns to scale

A

An increase in inputs by a certain proportion will lead to output increasing by a smaller proportion

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

Demergers

A

A single business is broken into two or more businesses to operate on their own, to be sold or to be dissolved.

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

Deregulation

A

The removal of legal barriers to allow private enterprises to compete in a previously protected market.

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

Derived demand

A

The demand for one good is linked to the demand for a related good

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

Diminishing marginal utility

A

If a variable factor is increased when another factor is fixed, there will come a point when each extra unit of the variable factor will produce less extra output than the previous unit; after a certain point, marginal output falls

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

Diseconomies of scale

A

The disadvantages that arise in large businesses that reduce efficiency and cause average costs to rise.

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

Divorce of ownership from control

A

Firms are owned by shareholders, who have little say in the day to day running of the business, and controlled by managers; this leads to the principal-agent problem.

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

Dynamic efficieny

A

Efficiency in the long run; concerned with new technology and increases in productivity which causes efficiency to increase over a period of time.

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

Economies of scale

A

The advantages of large scale production that enable a large business to produce at a lower average cost than a smaller business

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

External economies of scale

A

An advantage which arises from the growth of the industry within which the firm operates, independent of the firm itself

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

Fixed cost

A

Costs which do not vary with output

E.g heating/electricity.

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

For-profit business

A

A business whose main aim is to make money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Game theory

A

Used to predict the outcome of a decision made by one firm, when it has incomplete information about the other firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Geographical mobility of labour

A

The ease and speed at which labour can move from one area to another

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Horizontal integration

A

The merger of firms in the same industry at the same stage of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Increasing returns to scale

A

An increase in inputs by a certain proportion will lead to an increase in output by a larger proportion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Interdependent

A

The actions of one firm directly affects another firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Internal economies of scale

A

An advantage that a firm is able to enjoy because of growth in the firm, independent of anything happening to other firms or the industry in general

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Limit pricing

A

When firms set prices low in order to prevent new entrants; used in contestable markets

32
Q

Loss

A

When revenue does not cover costs

33
Q

Marginal cost

A

The additional cost of producing one extra unit of good

34
Q

Marginal revenue

A

The additional revenue gained by selling one extra unit of good

35
Q

Maximum wage

A

The highest wage an employer can employ a worker for.

36
Q

Minimum efficient scale

A

The lowest level of output necessary to fully exploit economies of scale

37
Q

Minimum wage

A

The lowest wage an employer can employ a worker for.

38
Q

Monopolistic competition

A

Where there are a large number of buyers and sellers who are relatively small and act independently, selling non-homogeneous goods

39
Q

Monopoly

A

A single seller in the market

40
Q

Monopsony

A

A single buyer in the market

41
Q

Nationalisation

A

When a private sector company or industry is brought under state control, to be owned and managed by the government

42
Q

Natural monopoly

A

Where economies of scale are so large that not even a single producer is able to fully exploit them; it is more efficient for there to be a monopoly than many sellers

43
Q

Non-collusive oligopoly

A

When firms in an oligopoly compete against each other, rather than making agreements to reduce competition

44
Q

Non-price competition

A

When firms compete on factors other than price, for example customer service or quality; they aim to increase the loyalty to the brand which makes demand more inelastic

45
Q

Normal profit

A

The minimum reward required to keep entrepreneurs supplying their enterprise, the return sufficient to keep the factors of production committed to the business; TC=TR

46
Q

Not-for-profit business

A

Where firms are run in order to maximise social welfare and help individuals and groups; any profit they do make is used to support their aims

47
Q

Occupational mobility of labour

A

The ease and speed at which labour can move from one type of job to another.

48
Q

Oligopoly

A

Where a few firms dominate the market and have the majority of market share, they act interdependently

49
Q

Organic growth

A

Where firms grow by increasing their output

50
Q

Overt collusion

A

Collusion where firms come to a formal agreement, for example a cartel

51
Q

Perfect competition

A

A market with many buyers and sellers selling homogenous goods with perfect information and freedom of entry and exit

52
Q

Perfectly contestable market

A

A market with no barriers to entry, where a new firm can easily enter and compete against incumbent firms completely equally

53
Q

Predatory pricing

A

When a large, established firm is threatened by new entrants so sets such a low price that other firms make losses and are driven out the market

54
Q

Price leadership

A

Where one firm sets prices and other firms tend to follow this firm as they are fearful of engaging in a price war

55
Q

Price wars

A

Where firms continuously drive prices down to the point where they are frequently making losses and firms are forced to leave

56
Q

Principal-agent problem

A

Where the agent makes decisions on behalf of the principal; the agent should maximise the benefits of the principal but have the temptation of maximising their own benefits

57
Q

Private sector

A

The part of the economy that is owned and run by individuals or groups of individuals

58
Q

Privatisation

A

The sale of government equity in nationalised industries or other firms to private investors

59
Q

Productive efficiency

A

When resources are used to give the maximum possible output at the lowest possible cost; MC=AC

60
Q

Profit maximisation

A

When firms produce at a point which derives the greatest profit; MC=MR

61
Q

Profit satisficing

A

When a firm earn just enough profit to keep its shareholders happy

62
Q

Public sector

A

The part of the economy that is owned or controlled by local or central government

63
Q

Regulatory capture

A

When regulators become more empathetic and are able to ‘see things from the firm’s perspective’, which removes impartiality and weakens their ability to regulate

64
Q

Revenue maximisation

A

When firms produce at a point which derives the greatest revenue; MR=0

65
Q

Sales maximisation

A

When firms produce at a point where they sell as many of their goods and services as possible without making a loss; AR=AC

66
Q

Static efficiency

A

The level of efficiency at one point in time

67
Q

Sunk costs

A

Costs that cannot be recovered once they have been spent e.g advertisement.

68
Q

Supernormal profit

A

The profit above normal profit, TR>TC

69
Q

Tacit collusion

A

Collusion where there is no formal agreement, such as price leadership

70
Q

Third degree price discrimination

A

When monopolists charge different prices to different groups for the same good or service

71
Q

Total cost

A

The cost to produce a given level of output total variable costs+total fixed costs

72
Q

Total revenue

A

Revenue generated from the sale of a given level of output price x quantity sold

73
Q

Variable cost

A

Costs which change with output

74
Q

Vertical integration

A

When a firm merges or takes over another firm in the same industry, but at a different stage of production

75
Q

X-inefficiency

A

When firms produce at a cost above the AC curve

Economics Key Definitions (Year 13) (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions