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Economics > Unit 3 > Flashcards

Unit 3 Flashcards

0
Q

Absolute poverty

A

The idea of being unable to afford basics such as food water or clothes

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1
Q

Abnormal profit

A

anything above normal profit (Price>AC)

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2
Q

Allocative efficiency

A

found where AR=MC

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3
Q

Average costs

A

the cost of producing each unit of output produced, calculated by; Total costs
__________
output

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3
Q

Average Revenue

A

the selling price - the amount of revenue a firm will receive for selling one unit of output.

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4
Q

Backward sloping supply curve

A

a supply curve that describes how workers will change the quantity of leisure hours they employ following fluctuations in the hourly wage rate.

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4
Q

Barriers to entry

A

obstacles to new firms from entering a market. Such as start up costs, limit pricing, economies of scale, predatory pricing or brand loyalty

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5
Q

Barriers to exit

A

obstacles to a firm from leaving a market. Such as sunk costs, contracts and advertising.

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5
Q

Collective bargaining

A

where a body speaks or negotiates on behalf of a group of people.

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6
Q

Contestable market

A

a market structure where there are no barriers to entry or exit and all costs are the same for both incumbent firms and new firms.

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6
Q

Derived demand

A

where the demand for a factor of production is based on the output it can produce.

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7
Q

Dominant monopoly

A

a monopoly where the main firm has over 40% market powers.

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7
Q

Dynamic Efficiency

A

Efficiency in terms of developing and introducing new production techniques and new products

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8
Q

Earnings

A

wages plus overtime, bonuses and commission

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8
Q

Economically inactive

A

Working age and physically able people who are neither in employment, nor unemployed, and so are not part of the labour force

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9
Q

Economic rent

A

a surplus paid to a factor of production above what is needed to keep it in its current occupation (wage-transfer earnings)

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9
Q

Economically active

A

Those in employment plus those unemployed

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10
Q

Elasticity of supply of labour

A

The responsiveness of the supply of labour to a change in the wage rate. Found by % change in supply divided by % change in wage.

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10
Q

Elasticity of demand for labour

A

The responsiveness of the demand for labour to a change in the wage rate. Found by % change in demand divided by % change in wage.

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11
Q

Employment rate

A

The proportion of the labour force who are employed

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11
Q

EU Directive

A

EU legislation that sets certain regulations about employment- pregnancy leave, Discrimination, working hours etc.

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14
Q

Internal Economies of scale

A

Economies of scale that occur within the firm as a result of its growth

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16
Q

Internal diseconomies of scale

A

Diseconomies of scale experienced by a firm caused by its growth

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17
Q

Geographical immobility

A

the obstacle of being unable to move from one area to another in order to change occupations. Could be due to moving charges, cultural differences, family ties

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18
Q

Flexible Labour market

A

A market that adjusts quickly and easily to changes in demand and supply so there is little unemployment.

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19
Q

Growth maximisation

A

the objective of increasing the size of a company as much as possible. Where AC=AR

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20
Q

Human capital

A

the skills and qualifications that an individual possesses.

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21
Q

External diseconomies of scale

A

Diseconomies of scale resulting from the growth of the industry, affecting firms within the industry

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22
Q

Income effect

A

when an increase in the wage rate causes workers to decrease the amount of hours they work in order to maintain their current income whilst gaining more leisure hours.

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23
Q

External economies of scale

A

Economies of scale that result from the growth of an industry and benefit firms within the industry

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24
Q

Fixed costs

A

Costs that do not change with a change of output

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25
Q

Labour force

A

participation rate The proportion of working age people who are economically active

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26
Q

Minimum efficient scale

A

The lowest level of output at which full advantage can be taken of economies of scale

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27
Q

Constant returns to scale

A

Long run average cost remaining unchanged when the scale of production increase

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28
Q

Leisure

A

An experience that occurs outside working hours within the time when people are free to select whatever they do.

29
Q

Long run

A

The time period where all factors of production are able to change

30
Q

Lorenz curve

A

a curve that displays how different proportions of the population hold different proportions of wealth.

31
Q

Long run labour supply

A

The supply of labour when it is possible to change occupation

32
Q

Lorenz curve

A

a curve that displays how different proportions of the population hold different proportions of wealth.

33
Q

Marginal costs

A

The costs a firm will incur for producing one extra unit of output.

34
Q

formal labour market

A

a labour market with large firms and unionised, well paid and more qualified workers. In result wages are sticky

35
Q

informal labour market

A

a labour market with small firms and low paid, unqualified work force

36
Q

Marginal revenue

A

the amount of revenue a firm will receive for selling one extra unit of output.

37
Q

Marginal Revenue product

A

the extra money that a firm will receive for the output produced by employing an extra worker.

38
Q

Market concentration ratio

A

the percentage share of the market of a given number of firms

39
Q

Means tested benefits

A

benefits that you only receive if your income is below a certain value.

40
Q

Monopolistic competition

A

A market structure in which there is a large no. of small firms selling a similar product

41
Q

Income

A

a flow of money that accumulates over a time period

42
Q

Monopoly

A

A market structure in which the firm is the industry

43
Q

Monopsony

A

Labour market where there is a single buyer of labour

44
Q

National Minimum wage

A

the minimum wage rate - by law- that firms are allowed to pay their workers.

45
Q

Net advantages

A

where the total pecuniary and non pecuniary advantages are greater than the total pecuniary and non pecuniary disadvantages of moving from one occupation to another.

46
Q

Net immigration

A

Immigration - emigration

47
Q

Non pecuniary advantages

A

the non financial benefits of a job

48
Q

Normal profit

A

profit that is the minimum to survive in the LR (AR=AC)

49
Q

Occupational immobility

A

The lack of skills and qualifications that stops an individual from moving from one occupation to another.

50
Q

Oligopoly

A

Market structure where a small number of large firms dominate the market and there is strong brand loyalty.

51
Q

Opportunity cost of leisure

A

the amount of income an individual will lose by employing more leisure hours.

52
Q

Pecuniary advantages

A

financial benefits of moving from one job to another.

52
Q

Monopoly

A

a market structure where there is a single buyer and a single seller.

54
Q

Productive efficiency

A

where firms employ 100% of their existing resources to the best of their ability. When firms work at the lowest point on their AC curve and on the edge of their PPF.

55
Q

Profit maximisation

A

A firm’s objective of making as much profit as possible (found where MR=MC) (profit= AR-AC)

55
Q

Profit satisfying

A

where a firm makes a reasonable level of profit to please shareholders. Output would be between profit maximising and sales revenue max.

55
Q

Progressive taxation

A

taxes that increase as you earn an higher income.

56
Q

Regressive taxation

A

taxation that is the same for everyone such as VAT.

56
Q

Relative poverty

A

you’re considered to be living in this poverty if your income is less than 60% of average household income.

57
Q

Sales revenue maximisation

A

the objective of increasing a firms revenue as much as possible. Found where MR=0

58
Q

Segmented labour market

A

When the labour market is split into two sections, formal and informal. Leads to inequality and market failure.

59
Q

Price taker

A

A firm that has no influence on price

60
Q

Short run

A

The time period where at least one factor of production remains constant or in fixed supply (normally capital)

61
Q

price maker

A

A firm that influences price when it changes its output

63
Q

Skill shortages

A

When there aren’t enough workers who contain the correct skills or qualifications to perform a job

65
Q

Substitution effect

A

when following an increase in the wage rate consumers choose to increase their working hours in a bid to further their income.

68
Q

Trade union

A

An organisation that seeks to represent and protect its members against firms within the workplace as they seek to improve working conditions and pay.

70
Q

Total revenue

A

The total amount of money a firm will receive for selling at a given output

72
Q

Transfer earnings

A

The minimum amount of money needed to keep an individual in their current job

73
Q

Sunk costs

A

Costs incurred by a firm that it cannot recover should it leave the market

74
Q

Unemployed

A

the term used to describe a group of people who are out of work but actively seeking employment.

76
Q

Universal benefits

A

benefits that are available to everyone no matter how much wealth they have eg. Pensioner winter fuel

78
Q

Marginal product of labour (MPL)

A

the change in output that results from employing one more worker

80
Q

Variable Costs

A

Costs that change with changes in output

81
Q

Name six internal economies of scale

A

1) purchasing economies of scale
Bulk buying

2) selling economies of scale
Buy and make fuller use of scales and distribution of facilities

3) technical economies of scale
Use expensive tech equipment efficiently
Make fuller use of advertising

4) managerial economies of scale
Employ more efficient specialist (accountants)

5) financial economies of scale
More credit worthy & access to more favourable rates of borrowing

6) risk bearing economies of scale
Can produce greater range of products

82
Q

Name 5 benefits of external economies of scale in travel and tourism

A

1) colleges & universities
Colleges + universities run t&t courses thus firms training cost reduced

2) travel agents & tour operators
May be able to take advantage of a pool of skilled + trained labour

3) ancillary (assisting industries)
Insurance companies, taxis, minibus services can help and reduce cost if nearby

4) specialisation
A large industry can allow for specialisation within a industry

5) improvements in infrastructure
Growth of an industry can encourage gov to improve infrastructure for companies benefit

83
Q

State examples of diseconomies of scale

A

Management control

  • large firm difficult to control and co-ordinate production
  • many tiers of management increase decision making time making firm less responsive to market changes
  • industrial relations can worsen as there are more people for there to be potential disputes
  • motivation falls as workers feel like a cog in a machine
84
Q

State examples of diseconomies of scale

A

Increased competition for resources which drives up their price

Higher levels of pollution and traffic congestion

Economics (4 decks)

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