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Economics > Unit 3 > Flashcards

Unit 3 Flashcards

(85 cards)

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0
Q

Absolute poverty

A

The idea of being unable to afford basics such as food water or clothes

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1
Q

Abnormal profit

A

anything above normal profit (Price>AC)

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2
Q

Allocative efficiency

A

found where AR=MC

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3
Q

Average costs

A

the cost of producing each unit of output produced, calculated by; Total costs
__________
output

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3
Q

Average Revenue

A

the selling price - the amount of revenue a firm will receive for selling one unit of output.

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4
Q

Backward sloping supply curve

A

a supply curve that describes how workers will change the quantity of leisure hours they employ following fluctuations in the hourly wage rate.

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4
Q

Barriers to entry

A

obstacles to new firms from entering a market. Such as start up costs, limit pricing, economies of scale, predatory pricing or brand loyalty

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5
Q

Barriers to exit

A

obstacles to a firm from leaving a market. Such as sunk costs, contracts and advertising.

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5
Q

Collective bargaining

A

where a body speaks or negotiates on behalf of a group of people.

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6
Q

Contestable market

A

a market structure where there are no barriers to entry or exit and all costs are the same for both incumbent firms and new firms.

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6
Q

Derived demand

A

where the demand for a factor of production is based on the output it can produce.

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7
Q

Dominant monopoly

A

a monopoly where the main firm has over 40% market powers.

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7
Q

Dynamic Efficiency

A

Efficiency in terms of developing and introducing new production techniques and new products

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8
Q

Earnings

A

wages plus overtime, bonuses and commission

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8
Q

Economically inactive

A

Working age and physically able people who are neither in employment, nor unemployed, and so are not part of the labour force

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9
Q

Economic rent

A

a surplus paid to a factor of production above what is needed to keep it in its current occupation (wage-transfer earnings)

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9
Q

Economically active

A

Those in employment plus those unemployed

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10
Q

Elasticity of supply of labour

A

The responsiveness of the supply of labour to a change in the wage rate. Found by % change in supply divided by % change in wage.

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10
Q

Elasticity of demand for labour

A

The responsiveness of the demand for labour to a change in the wage rate. Found by % change in demand divided by % change in wage.

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11
Q

Employment rate

A

The proportion of the labour force who are employed

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11
Q

EU Directive

A

EU legislation that sets certain regulations about employment- pregnancy leave, Discrimination, working hours etc.

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14
Q

Internal Economies of scale

A

Economies of scale that occur within the firm as a result of its growth

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16
Q

Internal diseconomies of scale

A

Diseconomies of scale experienced by a firm caused by its growth

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17
Q

Geographical immobility

A

the obstacle of being unable to move from one area to another in order to change occupations. Could be due to moving charges, cultural differences, family ties

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18
Flexible Labour market
A market that adjusts quickly and easily to changes in demand and supply so there is little unemployment.
19
Growth maximisation
the objective of increasing the size of a company as much as possible. Where AC=AR
20
Human capital
the skills and qualifications that an individual possesses.
21
External diseconomies of scale
Diseconomies of scale resulting from the growth of the industry, affecting firms within the industry
22
Income effect
when an increase in the wage rate causes workers to decrease the amount of hours they work in order to maintain their current income whilst gaining more leisure hours.
23
External economies of scale
Economies of scale that result from the growth of an industry and benefit firms within the industry
24
Fixed costs
Costs that do not change with a change of output
25
Labour force
participation rate The proportion of working age people who are economically active
26
Minimum efficient scale
The lowest level of output at which full advantage can be taken of economies of scale
27
Constant returns to scale
Long run average cost remaining unchanged when the scale of production increase
28
Leisure
An experience that occurs outside working hours within the time when people are free to select whatever they do.
29
Long run
The time period where all factors of production are able to change
30
Lorenz curve
a curve that displays how different proportions of the population hold different proportions of wealth.
31
Long run labour supply
The supply of labour when it is possible to change occupation
32
Lorenz curve
a curve that displays how different proportions of the population hold different proportions of wealth.
33
Marginal costs
The costs a firm will incur for producing one extra unit of output.
34
formal labour market
a labour market with large firms and unionised, well paid and more qualified workers. In result wages are sticky
35
informal labour market
a labour market with small firms and low paid, unqualified work force
36
Marginal revenue
the amount of revenue a firm will receive for selling one extra unit of output.
37
Marginal Revenue product
the extra money that a firm will receive for the output produced by employing an extra worker.
38
Market concentration ratio
the percentage share of the market of a given number of firms
39
Means tested benefits
benefits that you only receive if your income is below a certain value.
40
Monopolistic competition
A market structure in which there is a large no. of small firms selling a similar product
41
Income
a flow of money that accumulates over a time period
42
Monopoly
A market structure in which the firm is the industry
43
Monopsony
Labour market where there is a single buyer of labour
44
National Minimum wage
the minimum wage rate - by law- that firms are allowed to pay their workers.
45
Net advantages
where the total pecuniary and non pecuniary advantages are greater than the total pecuniary and non pecuniary disadvantages of moving from one occupation to another.
46
Net immigration
Immigration - emigration
47
Non pecuniary advantages
the non financial benefits of a job
48
Normal profit
profit that is the minimum to survive in the LR (AR=AC)
49
Occupational immobility
The lack of skills and qualifications that stops an individual from moving from one occupation to another.
50
Oligopoly
Market structure where a small number of large firms dominate the market and there is strong brand loyalty.
51
Opportunity cost of leisure
the amount of income an individual will lose by employing more leisure hours.
52
Pecuniary advantages
financial benefits of moving from one job to another.
52
Monopoly
a market structure where there is a single buyer and a single seller.
54
Productive efficiency
where firms employ 100% of their existing resources to the best of their ability. When firms work at the lowest point on their AC curve and on the edge of their PPF.
55
Profit maximisation
A firm's objective of making as much profit as possible (found where MR=MC) (profit= AR-AC)
55
Profit satisfying
where a firm makes a reasonable level of profit to please shareholders. Output would be between profit maximising and sales revenue max.
55
Progressive taxation
taxes that increase as you earn an higher income.
56
Regressive taxation
taxation that is the same for everyone such as VAT.
56
Relative poverty
you're considered to be living in this poverty if your income is less than 60% of average household income.
57
Sales revenue maximisation
the objective of increasing a firms revenue as much as possible. Found where MR=0
58
Segmented labour market
When the labour market is split into two sections, formal and informal. Leads to inequality and market failure.
59
Price taker
A firm that has no influence on price
60
Short run
The time period where at least one factor of production remains constant or in fixed supply (normally capital)
61
price maker
A firm that influences price when it changes its output
63
Skill shortages
When there aren't enough workers who contain the correct skills or qualifications to perform a job
65
Substitution effect
when following an increase in the wage rate consumers choose to increase their working hours in a bid to further their income.
68
Trade union
An organisation that seeks to represent and protect its members against firms within the workplace as they seek to improve working conditions and pay.
70
Total revenue
The total amount of money a firm will receive for selling at a given output
72
Transfer earnings
The minimum amount of money needed to keep an individual in their current job
73
Sunk costs
Costs incurred by a firm that it cannot recover should it leave the market
74
Unemployed
the term used to describe a group of people who are out of work but actively seeking employment.
76
Universal benefits
benefits that are available to everyone no matter how much wealth they have eg. Pensioner winter fuel
78
Marginal product of labour (MPL)
the change in output that results from employing one more worker
80
Variable Costs
Costs that change with changes in output
81
Name six internal economies of scale
1) purchasing economies of scale Bulk buying 2) selling economies of scale Buy and make fuller use of scales and distribution of facilities 3) technical economies of scale Use expensive tech equipment efficiently Make fuller use of advertising 4) managerial economies of scale Employ more efficient specialist (accountants) 5) financial economies of scale More credit worthy & access to more favourable rates of borrowing 6) risk bearing economies of scale Can produce greater range of products
82
Name 5 benefits of external economies of scale in travel and tourism
1) colleges & universities Colleges + universities run t&t courses thus firms training cost reduced 2) travel agents & tour operators May be able to take advantage of a pool of skilled + trained labour 3) ancillary (assisting industries) Insurance companies, taxis, minibus services can help and reduce cost if nearby 4) specialisation A large industry can allow for specialisation within a industry 5) improvements in infrastructure Growth of an industry can encourage gov to improve infrastructure for companies benefit
83
State examples of diseconomies of scale
Management control - large firm difficult to control and co-ordinate production - many tiers of management increase decision making time making firm less responsive to market changes - industrial relations can worsen as there are more people for there to be potential disputes - motivation falls as workers feel like a cog in a machine
84
State examples of diseconomies of scale
Increased competition for resources which drives up their price Higher levels of pollution and traffic congestion

Economics (4 decks)

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