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Economics > Unit 3: Microeconomic decision makers > Flashcards

Unit 3: Microeconomic decision makers Flashcards

1
Q

Money

A

An item which is generally acceptable as a means of payment

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2
Q

Commercial banks

A

Banks which aim to make a profit by providing a range of banking services to households and firms

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3
Q

Liquidity

A

Being able to turn an asset into cash quickly without a loss

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4
Q

Central Bank

A

A government-owned bank which provides banking services to the government and commercial banks and operates monetary policy

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5
Q

Disposable income

A

Income after income tax has been deducted and any state benefits received.

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6
Q

Wealth

A

A stock of assets including money held in bank accounts, shares in companies, government bonds, cars and property

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7
Q

Rate of interest

A

A charge for borrowing money and a payment for lending money

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8
Q

Average propensity to consume (APC)

A

The proportion of household disposable income which is spent

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9
Q

Consumption

A

Expenditure by households on consumer goods and income

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10
Q

Savings ratio

A

The proportion of household income that is saved (also called average propensity to save - APS - or savings rate)

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11
Q

Mortgage

A

A loan to help buy a house

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12
Q

Earnings

A

The total pay received by a worker

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13
Q

Wage rate

A

A payment which an employer contracts to pay a worker. It is the basic wage a worker receives per unit of time or unit of output

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14
Q

Time-rate system

A

A system of being paid based on the number of hours work

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15
Q

Piece-rate system

A

A system of being paid based on the amount produced

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16
Q

National minimum wage (NMW)

A

A minimum rate of wage for an hour’s work, fixed by the government for the whole economy

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17
Q

Wage differential

A

The difference in wages

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18
Q

Primary sector

A

Covers agriculture, fishing, forestry, mining, and other industries which extract natural resources.

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19
Q

Secondary sector

A

Covers manufacturing and construction industries

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20
Q

Tertiary sector

A

Covers industries which provide services

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21
Q

Elasticity of demand for labour

A

A measure of the responsiveness of demand for labour to a change in the wage rate

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22
Q

Elasticity of supply of labour

A

A measure of the responsiveness of the supply of labour to a change in the wage rate.

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23
Q

Specialisation

A

Concentrating on particular products or tasks

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24
Q

Division of labour

A

Dividing production into smaller tasks so that workers can specialise in particular tasks.

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25
Q

Trade union

A

An association which represents the interests of a group of workers

26
Q

Collective bargaining

A

Representatives of workers negotiating with employers’ associations

27
Q

Real income

A

Income adjusted for inflation

28
Q

Industrial action

A

When workers disrupt production to put pressure on employers to agree to their demands

29
Q

Strike

A

A group of workers stopping work to put pressure on an employer to agree to their demands

30
Q

Industry

A

A group of firms producing the same product

31
Q

The quarternary sector

A

Covers service industries that are knowledge based

32
Q

Internal growth

A

An increase in the size of a firm resulting from it enlarging existing plants or opening new ones

33
Q

External growth

A

An increase in the size of a firm resulting from it merging or taking over another firm

34
Q

Horizontal merger

A

The merger of firms producing the same product and at the same stage of production

35
Q

Vertical merger

A

The merger of one firm with another firm that either provides an outlet for its products or supplies it with raw materials, components or the products it sells

36
Q

Conglomerate merger

A

A merger between firms producing different products

37
Q

Rationalisation

A

Eliminating unnecessary equipment to make a firm more efficient.

38
Q

Vertical merger backwards

A

A merger with a firm at an earlier stage of the supply chain

39
Q

Vertical merger forwards

A

A merger with a firm at a later stage of the supply chain

40
Q

Internal economies of scale

A

Lower long run average costs resulting from a firm growing in size

41
Q

External economies of scale

A

Lower long run average costs resulting from an industry growing in size

42
Q

Internal diseconomies of scale

A

Higher long run average costs resulting from a firm growing too large

43
Q

External diseconomies of scale

A

Higher long run average costs arising from an industry growing too large

44
Q

Corporation tax

A

A tax on profits of a company

45
Q

Total cost

A

The total amount that has to be spent on the factors of production used to produce a product

46
Q

Average total cost

A

Total cost divided by output

47
Q

Fixed costs

A

Costs which do not change with output in the sort run

48
Q

Average fixed cost

A

Total fixed cost divided by output

49
Q

Variable cost

A

Costs that change with output

50
Q

Average variable cost

A

Total variable cost divided by output

51
Q

Long run

A

The time period when all factors of production can be changed and all costs are variable

52
Q

Price

A

The amount of money that has to be given to obtain a product

53
Q

Market structure

A

The conditions which exist in a market including the number of firms

54
Q

Competitive market

A

A market with a number of firms that compete with each other

55
Q

Normal profit

A

The minimum level of profit required to keep a firm int he industry in the long run

56
Q

Supernormal profit

A

Profit above that needed to keep a firm in the market in the long run

57
Q

Monopoly

A

A market with a single supplier

58
Q

Barrier to entry

A

anything that makes it difficult for a firm to start producing the product

59
Q

Barrier to exit

A

Anything that makes it difficult for a firm to stop making the product

60
Q

Scale of production

A

The size of production units and the methods of production used

61
Q

Sunk costs

A

Cost that cannot be recovered if the firm leaves the industry

Economics (4 decks)

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