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Economics unit 3 > Untitled Deck > Flashcards

Untitled Deck Flashcards

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1
Q

What are the core decision-makers within a microeconomic system?

A

Workers, households, money, banks, and trade unions

Beyond just producers and consumers.

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2
Q

How is economics structured hierarchically?

A

Economics > Microeconomics and Macroeconomics > Producers and Consumers > Workers and Households

Highlights interconnectedness in economics.

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3
Q

What is the primary role of money in an economy?

A

Facilitates economic activity as a medium of exchange for goods and services.

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4
Q

Why do we need money?

A

Provides a motive to produce and facilitates exchanges of goods and services.

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5
Q

What are the problems associated with a barter system?

A
  • Some goods are not portable
  • Some goods are not durable
  • Hard to assign value to goods.
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6
Q

List the key characteristics of money.

A
  • Durable
  • Divisible
  • Portable
  • Generally Accepted
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7
Q

What are the functions of money?

A
  • Medium of Exchange
  • Measure of Value
  • Store of Value
  • Means of Deferred Payment
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8
Q

What is the role of commercial banks?

A
  • Accept deposits
  • Enable payments
  • Provide loans
  • Help buy shares
  • Offer financial planning
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9
Q

What functions do central banks perform?

A
  • Issue notes and coins
  • Manage government payments
  • Manage national debt
  • Control other banks
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10
Q

What key aspects define households in microeconomics?

A
  • Income
  • Expenditures
  • Consumption
  • Wants
  • Needs
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11
Q

Fill in the blank: Spending is the same thing as _______.

A

Consumption

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12
Q

What factors affect household spending?

A
  • Disposable income
  • Wealth
  • Consumer confidence
  • Interest rates
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13
Q

What influences savings behavior?

A
  • Saving for consumption
  • Disposable income
  • Interest rates
  • Consumer confidence
  • Availability of saving schemes
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14
Q

What is borrowing in the context of banking?

A

Getting money from a bank.

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15
Q

What factors influence borrowing decisions?

A
  • Interest Rates
  • Wealth and Income
  • Consumer Confidence
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16
Q

What does the labor market encompass?

A

Everything related to workers and their employment.

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17
Q

What are the types of payment for labor?

A
  • Time Rate Wage
  • Piece Rate Wage
  • Salary
  • Performance Related Payments
  • Commission Based
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18
Q

What is labor demand?

A

The number of workers that firms want at a certain wage rate.

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19
Q

What is labor supply?

A

The number of workers available and willing to work at a certain wage rate.

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20
Q

Describe the backward-bending labor supply curve.

A

At high wage rates, individuals may opt to work fewer hours.

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21
Q

What factors shift the labor demand curve?

A
  • Consumer Demand for the Product
  • Productivity of Labor
  • Price and Productivity of Capital
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22
Q

What affects the labor supply curve?

A
  • Advantages of an Occupation
  • Availability of Education and Training
  • Demographic Changes
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23
Q

Why do wage rates typically increase over time?

A
  • Experience
  • Skills
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24
Q

What are wage differentials?

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A

Differences in wages among different jobs or individuals.

25
What factors contribute to wage differentials?
* Different Abilities and Qualifications * Demand for certain skills * Risk Involved * Unsociable Hours * Lack of Information
26
What are fringe benefits?
Perks associated with a job, such as vacation and company-provided vehicles.
27
What are the functions of trade unions?
* Negotiate for non-wage benefits * Defend employee rights * Improve pay and benefits * Support unfairly dismissed workers * Take industrial actions
28
How do trade unions advocate for workers' rights?
By providing collective bargaining power.
29
What are non-wage benefits that trade unions negotiate for?
* Fringe benefits * More vacations * Defend employee rights * Improve pay and other benefits * Support workers who have been unfairly dismissed or discriminated against * Take industrial actions such as strikes and overtime bans
30
What is the role of trade unions in advocating for workers' rights?
Trade unions give workers collective bargaining power, making their demands stronger than if they acted individually.
31
List some demands that trade unions can argue for.
* Increased wage rates when the business is thriving * Better pay rates reflecting high output or long working hours * Wage increases keeping pace with the rising cost of living * Improved working conditions and safety measures
32
What is one advantage of trade unions for workers?
Collective action strengthens their position.
33
What is a disadvantage of trade unions for workers?
Potential loss of wages due to strikes halting production.
34
What is one advantage of trade unions for firms?
Time-saving negotiation by discussing issues with a union instead of individual workers.
35
What is a disadvantage of trade unions for firms?
Strikes can halt work.
36
What are the three sectors into which firms are categorized?
* Primary * Secondary * Tertiary
37
Define a public sector firm.
A public sector firm is owned by the government.
38
Define a private sector firm.
A private sector firm is owned by private individuals or entities.
39
What are characteristics of small firms?
* Less capital * Smaller workforce * Reduced need for machinery
40
What is one advantage of small businesses?
Independence allows owners to run the business as they see fit.
41
What is one disadvantage of small businesses?
Small firms often face higher costs compared to larger firms.
42
What are two ways a firm can grow?
* Internally * Externally
43
What is internal growth?
Expanding the scale of production of the firm's existing operations.
44
What is external growth?
When two or more firms join together, also called merging.
45
What is horizontal integration?
When two firms producing the same type of product merge.
46
List advantages of horizontal integration.
* Exploits internal economies of scale * Saves costs by laying off duplicate assets * Revenue increases by creating and selling a wider range of products * Reduces competition
47
What is vertical integration?
Occurs when companies involved in different levels of production of the same good merge.
48
What are the advantages of vertical integration?
* Prevents firms from supplying materials or selling products to competitors
49
What is lateral integration?
Happens when firms producing different types of products at different levels merge.
50
What are the advantages of lateral integration?
* Diversifying risks * Creating new markets * Transfer of ideas
51
What are internal economies of scale?
Decisions a firm makes to gain economic advantages.
52
List examples of fixed costs.
* Bank loans * Telephone bills * Rent
53
What is the formula for Average Fixed Cost (AFC)?
AFC = Total Fixed Cost / Total Output
54
What are variable costs?
Costs that fluctuate with the level of output produced.
55
List examples of variable costs.
* Electricity bill * Wages * Cost of raw materials
56
What is Total Cost (TC)?
The sum of total fixed costs and total variable costs.
57
What is Total Revenue (TR)?
TR = Number of Units Sold × Price per Unit
58
List some objectives of firms.
* Survival * Profit * Growth * Market Share * Service to Society
59
What is a monopoly?
A business that dominates the market as the sole seller of a product or service.

Economics unit 3 (1 decks)

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