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economics > Strand 3 > Flashcards

Strand 3 Flashcards

(47 cards)

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1
Q

Factor of Production

A

are those elements used in the production of goods and services.
There are 4 factors of production: Land, Labour, Capital and Enterprise

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2
Q

Land

A

is anything provided by nature that is used in the production of goods and services.
e.g timber, water
payment: rent

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3
Q

Finished Goods

A

the final good or service consumed by the consumer. They are sold on the goods and services markets. They are consumed for the utility they generate in their own right

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4
Q

Supply Price of a factor of production

A

is the minimum payment necassary to bring the factor of production into to use and to maintain it in that use

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5
Q

Economic Rent

A

is the the return on any Factor of Production in excess of its supply price
(value of land is €0 so all rent is technically economic rent)

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6
Q

Derived Demand

A

demand for a factor of production not for it’s own sake, but for its use in the production of goods and services that people want

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7
Q

Characteristics of Land

A

All payment is economic rent

supply of land is fixed - perfectly inelastic

Land is a non specific FoP

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8
Q

Enterprise

A

is the factor of production that brings the 3 other factors of production together to be used in the production of goods and services.
The entrepreneur takes the RISK.
payment: profit/loss

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9
Q

Characteristics of Enterprise

A

They take the risk

They can make a profit or loss - make a negative return (only factor to do that)

Payment is residual - everything/else is paid before the entrepreneurs is paid

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10
Q

Normal Profit

A

the profit earned when a quantity is produced where AR=AC. It’s the minimum amount of profit that must be earned for a firm to contnue in business in the long run.

Seen as a cost of the business

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11
Q

Capital

A

is anything manmade that is used in the production of goods and services
payment: interest

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12
Q

capital deepening

A

The increasing the amount of capital by a higher percentage than the increase in the amount of labour, so that the ratio of capital to labour increases

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13
Q

capital widening

A

the increasing the amount of capital and labour so that ratio of capital to labour remains unchanged

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14
Q

The Marginal Effiency of Capital (MEC)

A

is the extra profits that is generated by employing one extra unit of capital, i.e the extra revenue generated by the unit of capital minus its cost

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15
Q

Labour

A

is the human element that is used in the production of goods and services
payment: wages

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16
Q

The nominal wage

A

is the rate of pay or salary of an employee

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17
Q

The real wage

A

is the purchasing power of wages

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18
Q

Labour productivity

A

measures the output that is produced by a worker per period of time

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19
Q

The Marginal Physical Product of Labour (MPPL)

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A

is the extra output generated as a result of employing an extra unit of labour

MPPL = △TOTAL OUTPUT
————————–
△ LABOUR

20
Q

The Marginal Revenue Product of Labour (MRPL)

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A

is the extra revenue generated as a result of employing an extra unit of labour. It can be calculated in different ways.

MPPL = △TOTAL OUTPUT
————————–
△ LABOUR
or

MRPL = MPPL x MR
MRPL = MPPL x Price

Also the demand for labour at any given wage rate

21
Q

The labour force participation rate

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A

is the percentage of the population of working age who are in the labour force (i.e. who are working or seeking work)

population of working age

22
Q

occupational mobility of labour

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A

the willingness of an individual to move from one occupation to another

23
Q

geographical mobility of labour

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A

the willingness of an individual to move from one location to another to take up employment

24
Q

Full employment

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A

is a situation where everyone who wants a job can find one at existing wage rates. A 4% unemployment rate generally indicates that an economy has reached full employment

25
wage drift
describes a situation where wage levels rise above negotiated levels
26
minimum wage
is the lowest wage per hour that a worker must be paid
27
gender pay gap
is the difference between the average gross earning of female and male employees, based on the gross hourly earnings of all employees.
28
unequal pay
in relation to men and women refers to different pay rates paid to men and women for the same job. This is illegal
29
Monopoly
one firm supplies the goods/services
30
Oligopoly
the market is dominated by a small number of large interdependent firms
31
Imperfect competition
the market can have many sellers, who act independently selling differentiated products
32
Perfect competition
this market can potentially have many thousands of suppliers selling identical products
33
this market can potentially have many thousands of suppliers selling identical products
where a firm may need to be granted a permit in order to trade. In perfect competition markets it’s assumed that no such barriers exist
34
Competitive advertising
is advertising that promotes the qualities/features of one firm’s goods over those of it competitors
35
Generic advertising
is advertising that promotes the qualities/features of all the output of an industry without identifying individual suppliers
36
Patent
gives the inventor/developer the sole right to supply the invention for a period of time
37
Market failure
occurs when there is inefficiency in the allocation of goods and services in a free market
38
Price discrimination
involves charging different customers different prices for the same goods/services, where the reason for the price differences is not due to differences in the const of production
39
Deregulation
occurs when regulation/laws that prevent new firms from entering a market are removed
40
Brand loyalty
is the tendency of some customers to continue buying a certain brand of a good rather than competing brands
41
Firms are Interdependent
when they take the likely reaction of competitors into account, especially when making decisions about price
42
Price rigidity
is the tendency in oligopolistic markets for price nor to change, even if costs of production change. This is because a price rise would result in a fall in sales, and a price fall would potentially provoke a price war with rivals
43
Price constancy
involves leaving the price unchanged even if the cost of production change. The reason for doing so is that it could actually cost more to change the price of the good than it would to take a dent in profits
44
Limit pricing
occurs where existing firms discourage new firms from entering the market by charging a lower price than then price they could charge. This makes it potentially profitable for the new firm to enter the market and deters the new firm from entering. It is illegal
45
Market sharing
is where rival firms divide up sales territories, they agree on the locations where the individual firms will trade. Once this is agreed, they do not trade in one another’s area. It can also involve agreeing on which customers (or demographics) they will or will not sell to
46
Price Discrimination
involves charging different customers different price for the same goods/service where the reason for the price difference is not due to differences in the cost of production
47

economics (4 decks)

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