every micro book defenition Flashcards
(25 cards)
abnormal profit
profit over and above normal profit aka supernormal profit
absolute poverty
a condition characterised by severe deprivation of basic human needs. it depends on income and access to services
adverse selection
a situation in which people who buy insurance often have a better idea of the risks they fave than the sellers of insurance do, people who face large risks are more likely to buy insurance
allocative efficiency
occurs when it is impossible to to improve overall economic welfare by reallocating resources between markets in the whole economy p=mc in every market
altruism
concern for the welfare of others
anchoring
cognitive bias describing the human tendency when making decisions to rely too heavily on the first piece of information offered
artificial barriers
barriers erected by firms themselves such as high levels of advertising expenditure or predatory pricing
asymmetric information
when one party to a market transaction possesses less information relevant to the exchange than the other
automation
automatic control where machines operate other machines
availability bias
occurs when individuals make judgements about the likelihood of future events based on how easy it is to recall similar events
average cost of labour
total wage cost divided by total workers
average fixed costs
total cost of employing fixed factors of production to produce a particular level of output divided by the size of the output
average revenue
revenue/output
average returns of labour
total output / total number of workers
average total cost
total cost of producing a particular level of output divided by the size of the output
average variable cost
total cost of employing the variable factors of production to produce a particular level of output divided by the size of the output
behavioural economics
a method of economic analysis that applies physiological analysis and insights to explain how individuals make choices and decisions
bounded rationality
when making decisions an individuals rationality is limited by the information they have the limitations of their minds and the amount of decision making time they have
bounded self control
limited self control in which individuals lack the self control to act in what they see as their self interests
cartel
a collusive agreement by by firms to usually to fix prices sometimes there is also an agreement to restrict output and deter entry of new firms
choice architecture
a framework setting out different ways in which choices can be presented to consumers and the impact of that presentation on consumer decision making
cognitive bias
a mistake in reasoning or in some other mental thought process occurring as a result of, for example, using rules of thumb. or holding on to beliefs or preferences despite evidence
collective bias
a process by which wage rates and other conditions of work are negotiated and agreed upon by a union or unions with an employer or employers
competition and markets authority
government agency responsible for advising on and implementing uk competition policy
