3.1.5 Flashcards
(75 cards)
1
Q
What is a closed economy?
A
An economy where goods and services are provided by only the public sector.
2
Q
What does diversified mean?
A
When a firm expands into different industries.
3
Q
What are market structures?
A
How markets operate to enable buyers and sellers to come together.
4
Q
What is a merger?
A
Where two or more companies join together.
5
Q
What is a mixed economy?
A
An economy where goods and services are provided by both the private and public sector.
6
Q
What is a monopoly?
A
Where there is only one provider of a kind of good or service. Has to have at least 25% share of the market.
7
Q
What is a multinational company (MNC)?
A
A company that has outlets or production facilities in more than one country. Usually PLCs.
8
Q
What are nationalised industries?
A
Public corporations previously part of the private sector.
9
Q
What is an oligopoly?
A
Where a few dominant firms have a large share of a particular market.
10
Q
What is an open economy?
A
An economy where goods and services are provided only by the private sector.
11
Q
What is product differentiation?
A
How firms make a product or service different to those of its competitors.
12
Q
What is acquisition?
A
When one firm takes over another but controlling more than 50% of it.
13
Q
What are barriers to entry?
A
Obstacles which may discourage firms from entering the market. Both visible and invisible.
14
Q
What is a competitive market?
A
Market structures where there is a potential competition between producers.
15
Q
What is a cartel?
A
A small group of large firms that work together to keep prices high and therefore keep all their profits high. Usually illegal.
16
Q
What is a collusion?
A
An informal agreement between firms to restrict competition.
17
Q
What is monopoly power?
A
When a firm owns at least 25% of the market share.
18
Q
What is a patent?
A
A license that allows the inventor to use it exclusively.
19
Q
What is a price taker?
A
A firm that sets their prices based on the price maker.
20
Q
What is a price maker?
A
The leading firm that sets the market price.
21
Q
What is a price war?
A
Where one firm reduces their price and others follow.
22
Q
What is derived demand?
A
Demand that arises due to demand for another good or service.
23
Q
What is direct tax?
A
Tax taken from your wage/salary.
24
Q
What is gross pay?
A
Total pay before deductions are taken off.
25
What is income tax?
A progressional tax taken directly from your salary/wage.
26
What is labour mobility?
Ease at which workers can move geographically and occupationally.
27
What is National Insurance Contribution(NIC)?
NIC is a direct, proportional tax that is typically around 13% of income. It pays for public services.
28
What is net pay?
The total pay after all deductions such as tax and national insurance are taken off.
29
What is a professional?
A person who have jobs that require post-graduate qualifications.
30
What is a progressive tax?
The more you earn the higher % you pay in tax.
31
What is a proportional tax?
Where everybody pays the same % in tax.
32
What is a salary?
A fixed amount you receive each month usually expressed as a yearly amount.
33
What is a trade union?
An organisation of workers that negotiate wages, working conditions and hours. Collective bargaining.
34
What is value added?
Value is added by work being done on it.
35
What is a wage?
An hourly rate for labour, often calculated weekly.
36
What are dominant firms?
Firms that have a significant share of a particular market that often produce a particular type of branded product or service. They are usually in high demand and control prices.
37
What are 4 advantages of a small firm?
They are flexible and can adapt quickly. They offer personal service. They have better communications between employees higher up. They are innovative as they face competition.
38
What are 4 disadvantages of a small firm?
They have a higher cost as they don't have a large revenue so need to charge more to cover costs. They have a lack of finance as sales are not as high. They find it difficult to employ specialists as they cannot pay high wages and they are vulnerable as they struggle to survive.
39
What are 3 advantages of a large firm?
There is market domination as they are well known and many consumers first choice. They have a good economy of scale meaning they are bigger and production is cheap, keeping prices low. They have large-scale contracts.
40
What are 4 disadvantages of a large firm?
They can be too bureaucratic which makes decision making slow as they have to consult many people to make a decision. They may lack coordination and control as there are many employees. They may have a lack of motivation as the efforts of one employee may seem insignificant to the whole company.
41
What are the three types of economies?
Open, closed and mixed.
42
What is perfect competition and some of its features?
A market where there are large number of firms and they are all small compared to the market. The firm has no control over price. It has low barriers to entry and exit and all the firms produce the same thing(homogeneous). e.g. potato farmer
43
What are the advantages of perfect competition for the consumer and for the producer?
An advantage for the consumer is it is a homogeneous product so there are no shoe leather costs. An advantage for the producer is the low barriers to entry and exit.
44
What is monopolistic competition and what are the features?
A fairly large number of firms producing somewhat differentiated products. They have different prices, there are low barriers to entry/exit. There is some control over the price and it the demand is relatively elastic. e.g. chemist, restaurant
45
What are the advantages for the consumer and producer in monopolistic competition?
Advantages for the consumer is that there is more choice and a variety of prices. Advantages for the producer is that it is easy to enter, you can set your own prices and if you increase prices you may still retain some customers.
46
What are the features of an oligopoly?
It is difficult to join the market, the products are differentiated and they are all trusted brands. e.g. car, airlines
47
What are the advantages to producers and consumers of an oligopoly?
Advantages to the consumer is they are trusted brands and are differentiated products so lots of choice. An advantage to the producer is that there are relatively inelastic demand.
48
What are the features of a monopoly?
It is very difficult to compete and enter the market. There is only one provider. It has highly inelastic demand. e.g. ferries or bridges.
49
What are the advantages for consumers and producers of a monopoly?
An advantage to the consumer is there is not much choice so low shoe leather costs. An advantage to the producer is they have complete control over prices as they have inelastic demand.
50
What are the disadvantages of mergers?
If it is between competitive firms it will reduce competition and increase monopoly power.
51
What are the disadvantages of monopolies?
They may cause a misallocation of scarce resources, with prices rising well above competitive prices, so this means regulatory authorities should be suspicious of motives between firms.
52
What are the benefits of monopolies?
They create economic benefits including the economies of scale, innovation and dynamic efficiency, and export earnings.
53
What is price competition?
Where companies lower their prices to increase their customer base. If customers increase the market share rises. Firms have to remember to sell more than cost-price otherwise survival won't be possible.
54
What is non-price competition?
It could be a convenient location, unique or specialised goods, quality, marketing/advertising or branding.
55
How would a firm survive in a competitive market?
They would need to win back market share by luring customers away from competition. They could also diversify products.
56
Why does competition exist?
To survive in a market, to maximise profits, to increase market share and dominate a market and to increase efficiency.
57
Who are the buyers and sellers in the labour market?
The buyer is the public and private sector(demand) and the seller is the working population(supply)
58
What is demand for labour dependent on?
It is dependent on the demand for another good or service-it is a derived demand.
59
What is the demand curve for labour like?
On the left where there is usually price it is wage rate. The curve slopes down from left to right(inversely related). When wages rise the demand for workers falls.
60
What is demand for labour influenced by?
The cost of hiring labour, the cost of substitutes(machinery), productivity of workers, recruitment costs, perks and benefit costs and other factors such as pensions. These factors will cause a shift in the demand curve.
61
What is the supply curve for labour?
It slopes from left to right upwards(positive correlation). When wage rates increase more people make themselves available for work. When wage rates fall, less people are willing to work. These factors will cause a shift in the supply curve.
62
What are the factors affecting supply of labour?
A change in the age of the working population, changes in the school leaving age or retirement age, the number of women in the workplace, age distributions in the workplace and the degree of immigration in the workplace.
63
What factors around qualifications and training affect the demand for labour?
Employers want to recruit able people who are literate and numerate. They also want specialists. If the labour supply is well educated it will be more productive and attractive to firms.
64
What are the aims of trade unions?
To negotiate pay and working conditions, to provide legal protection, to put pressure on governments to force change and to provide financial benefits.
65
What are the three types of striking?
Token-a short stoppage for a few hours a day
Selective-some people striking to cause a disruption
All out-everyone striking
66
What is picketing?
Were employees stand outside their place of work and protest. This can severely damage a firm's reputation and brand name.
67
What is work to rule?
Where employees slow their work down by sticking to the contract.
68
What is go slow?
Where employees deliberately drag jobs out so they take longer to complete.
69
What is non-cooperation?
Where workers refuse to change their procedures.
70
What is overtime ban?
When workers will only work the times on their contract and will not help out additionally if required for a deadline/large order.
71
How to avoid job losses?
Raise labour productivity, firms pass on wage increase to customer in the form of higher prices and firm accepts a lower profit margin.
72
What are the reasons for minimum wage?
To benefit disadvantaged workers, to reduce poverty and it is a way to reduce the income gap.
73
What is the elasticity of labour like?
Demand for labour is low and elastic and supply is high and elastic.
74
What is active and inactive labour supply?
Active=employed e.g. employees, self employed
Inactive=looking after family, long and short term sick, students, discouraged workers and the retired.
75
What does elasticity of supply of labour like?
It measures the responsiveness of labour supplied given a change in the wage rate. If wage rate changes and there is a sudden increase into that profession it is elastic supply. It will be elastic if it is an unskilled profession and inelastic if it is a skilled one.
