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November exams > Economics P2 > Flashcards

Economics P2 Flashcards

1
Q

Perfectly competitive market

A

there are many buyers and sellers of the same product

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2
Q

Demand

A

The quantity of a good or service people are willing and able to buy

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3
Q

supply

A

the quantity of a good or service suppliers are willing and able to suplly

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4
Q

oligopoly

A

A state of limited competition in which he market is shared by a few producers and sellers of a product

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5
Q

utility

A

the satisfaction gained from consuming a good/service
(and the value of a product is determined by the utility derived from it)

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6
Q

substitute

A

product that can be used i place of another without lessening utility (price increase in one will lead to increse in demand for the other)

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7
Q

complements

A

goods that are often used together (price increase in one will decrease demand for the other)

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8
Q

determinants of demand

A

HIS AGE

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9
Q

determinants of supply

A

TWO TIPS (plus no. of suppliers)

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10
Q

difference between needs and wants

A

needs are necessary to live and function, wants improve quality of life

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11
Q

3 functions of markets

A
  1. Bringing supply and demand together: markets create contact between producers and cosumers
  2. Allocation of resources: profit maximisation and utility maximisation lead tom efficient allocation of products
  3. Self regulation: no external intervention should be needed as demand and supply control prices
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12
Q

PPC

A

diagram showing what combinations of two products can be produced if the limited, fixed supply of FOP is used efficiently

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13
Q

indifference curve (IC)

A

graph that shows combinations of two goods that give the consumer equal utility

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14
Q

Marginal rate of substitution (MRS)

A

The rate at which a consumer will forgoe one product for the addition of one unit of another (steep IC means high MRS)

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15
Q

budget line/budget constraint

A

all possible combinations of goods that can be bought with a consumer’s available income

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16
Q

market failure

A

market forces of demand and supply are unsuccessful in allocating resources efficiently, causing external costs or benefits

17
Q

non-excludable and non-rivalrous

A

non-excludable: no cost involved for consuming the good
non-rivalrous: one person’s consumption does not decrease the amount available to the next person

18
Q

5 reasons for market failure

A
  1. Missing markets (public goods)
  2. imperfect competition (high prices and limited goods)
  3. Lack of information (workers and entrepreneurs are not aware of the demand for certain products/labour)
  4. Immobility (geographical and occupational) of FOP meaning demand cannot be met
  5. Imperfect distribution of wealth
    Those who earn more can buy more products; means that some people have an abundance of goods while others have too little - allocative inefficiency
19
Q

disequilibrium

A

demand and supply are not balanced, leading to surpluses and shortages

20
Q

employment

A

the engagement of the FOP called labour in a productive activity for which they receive a remuneration

21
Q

Unemployed (official definition)

A

People between 15 and 64 who are willing and able to work but cannot find a job

22
Q

5 Causes of unemployment

A
  1. Poplation growth > economic growth
  2. Mechanisastion as a result of competition (local and global)
  3. Past policies
  4. Business cycles
  5. Lack of information
23
Q

3 effects of unemployment

A
  1. Poverty (UIF cannot support all those who are unemployed)
  2. Social problems
    Crime rates increase as a result of boredom or having to provide for oneself or one’s family). This leads to an unsafe community

Cannot pay for rent/mortgage or food therefore people rely on friends and relatives

Cases people to feel bored, depressed, unmotivated. May lead to substance abuse/domestic violence

  1. Cost to taxpayers
    Erodes the tax base, causing the government to charge taxpayers more in order to pay for grants. money is not used on essential infrastructure
24
Q

GEAR

A

Growth, Employment And Redistribution policy to increase economic growth

25
Q

ASGI-SA

A

Accelerated and Shared Growth Initiative for SA (decrease unemployment)

26
Q

JIPSA

A

Joint Initiative on Priority Skills Acquisition

27
Q

NPWP

A

National Public Works Program (to upgrade infrastructure and provide jobs at the same time)

28
Q

EEA (affirmative action)

A

Employment Equity Act: Address inequalities of the past by giving preference to people of colour, women and people with disabilities

29
Q

derived demand

A

demand that is a result of demand for another

30
Q

collective bargaining

A

workers collectively negotiate working conditions with employer

31
Q

bargaining council

A

representatives from labour unions and employers’ organisations in a certain industry that engage in collective bargaining

32
Q

what dos the LRA (Labour Relations Act) do?

A
  1. Governs relations between employers and employees
  2. Ensures fair salaries/wages for employees and that they are treated fairly
  3. Ensures employees peform their duties to the best of their ability
  4. Framework for collective bargaining
  5. helps in resolution of labour disputes
33
Q

Basic Conditions of Employment Act (BCEA)

A

Advance economic development and social justice

deals with working hours,child labour, leave, public holidays, wages, salaries and deductions

34
Q

Labour Court

A

handles labour disputes (such as unfair dismissals) and appeals go to the Labour Appeal Court

35
Q

4 ways of Addressing unemployment

A
  1. Government programs
  2. Fiscal policy (taxes)
  3. Monetary policy (interest rates)
  4. Supply side policies
36
Q

5 Ways of addressing market failure

A
  1. Indirect taxation (discourage consumption of demerit goods and increase gov. revenue)
  2. Producer subsidies
  3. Regulations (age requirements, banning smoking in public places)
  4. Direct provision
  5. Privatisation/nationalisation
37
Q

underemployment

A

people unwillingly working in a low skilled, low paying job (not employed to their full capacity)

November exams (4 decks)

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