economics - paper one

as people we have infinite wants while our resources are scarce

producers, consumers, government

the benefit forgone of the next best alternative

Capital, Enterprise, Land, Labour

manufactured goods used to make other goods and services - interest eg machines, roads

a profit opportunity - profit eg entrepreneur

any natural resource - rent eg trees water landstock

human service - wages eg workers, education

when households,firms or countries focus on producing certain products eg apple and technology

seperation of a work process into a number of tasks/products, each task performed by a seperate person of group of persons

extracting raw materials eg farming, fishing, mining - Middle East

processing and refining eg manafacturing - China

providing services to public or private sector eg education, health, retailing - UK

tangible and physical product eg baked beans

intangible and non physical eg haircut

buyers and sellers exchange goods and services at a given price

markets in which productive resources are bought and sold

where goods and services are bought and sold

the quantity of a good/service that consumers are willing and able to buy at a given price

quantity of a good/service a producer is willing and able to sell at a given price

consumers buy more of a good when its price decreases and less when its price increases

price, advertisement, complentary products, government prolicy, income, substitution

The responsiveness of the quantity demanded to the change in price of a product

describes demand that is very sensitive to a change in price eg tesco bread

demand in which changes in price have little or no effect on the amount demanded eg petrol

marked price of good increases, increase in supply

price, production costs, technology, government & taxes, climate conditions, price of similar products, competition

state of equality between demand and supply

Price x Quantity

alternatives; if price of product A increases demand for product B will increase eg coke and pepsi

used together; if demand for product A increase demand for product B will also increase

increase in demand for one good will restrict availability for another use. eg increase demand for oil for plastic will lead to decrease supply in oil for petrol

demand that arises from the demand for the product the resource produces. eg increase demand for baked beans will lead to increase demand for tins

occurs when production of a products creates a by-product that can also be supplied eg increase in production of sheep for meat will lead to increase supply of wool.

percentage change in quantity demanded/percentage change in price

number and closeness of substitutes, proportion of income, influence of habit (addictive), needs vs wants, branding, time

Exists when a small change in price causes a major change in quantity supplied. eg fidget spinner, taxi service

exists when a change in a good's price has little impact on the quantity supplied eg housing, water

Level of spare capacity, level of stocks and work in progress, production lags, sustainability of factors of production, time period

percentage change in quantity supplied/percentage change in price

Costs that do not vary with the quantity of output produced

costs that vary with the quantity of output produced

fixed costs + total variable costs

Total costs / output

units x variable cost

exploitative labour, bullying suppliers, false info to customers, water, air or noise pollution, destruction of environment

making best possible use of resources, maximise output from given inputs and so minimise their costs

total amount made by a business in a given time period

how much an employee can produce in a given time

total revenue minus total cost

the portion of a market controlled by a particular company or product.

reduction in average cost caused by an increase in the scale of production

large scale machinery will cost more but can operate much faster and cuts average cost eg bakery

when large firms can afford a specialist to manage particular areas of the company eg season sales executives

more favourable rates of borrowing as lenders see larger businesses as more reliable compared to smaller businesses

allows a firm to spread risk by having different products to fall back on eg supermarket

achieved via buying in bulk eg costco

opening new stores or launching new products, expansion from within

buying out a business, expansion by joining other businesses

A company that develops a product concept and sells others the rights to make and sell the products.

an individual or business that is granted the right to sell another party's product

opening new stores (physical) , e-commerce (online sales, trading 24/7) , outsourcing (3rd party to carry your business)

merger or takeover

Combination of two or more companies into a single firm under joint ownership A + B = AB

where one business buys another business out, manager of dominant business will be in control A + B = A

• gaining access to new customers and markets

• avoiding entry barriers to new overseas markets

• acquiring existing business equipment

• benefit from existing brand name

• having opportunity to benefit from economies of scale

it can be expensive to takeover/merge with another business managers may lack the experience to deal with the other businesses

• low risk

• using business' own strengths

• no risk of a clash of culture

• long period between investment and return on investment

• growth may be limited

occurs when a business becomes inefficient because of growth this leads to a rise in unit costs

as business grows it is difficult to keep everyone informed, message can become distorted, relationship with supplies may become difficult to maintain, reduced staff motivation can lead to employees feeling overwhelmed, reduces productivity

increased number of resources are difficult to coordinate to make sure everything is being used efficiently

restrictions that will block potential entrants from entering a market profitably

costs, regulations, market shares, design

exclusive rights to make or sell inventions for a number of years

reducing the price of a good to just above average cost to deter the entry of new firms into the market. Prices are set at levels which are likely to make it unprofitable for potential entrants who might consider coming into the market

a firm that can produce a particular product or service at a lower cost than the competition.

developing consumer loyalty by establishing branded products can make more succesful entry into the market

leads to new products while also allowing firms to improve production and unit costs

some industries have high start up costs or high ration of fixed to variable costs which may be unrecoverable

difficult for firms to leave a market and use their resources to produce a different good/service

a market in which there are many buyers and many sellers, firms may use non price competition to differentiate

• low/no barriers to entry

• similar/identical products

dairy industry, stock market

number of firms within an industry and the way those businesses behave

a market structure in which a large number of firms all produce the same product

• no barriers to entry

• price elastic

quality, design, promotion, branding, packaging

Something that distinguishes a firm's product from those of its competitors

The promotion of a product or service by identifying it with distinct characteristics (usually associated with public perception, quality or effectiveness)

exhibits some but not all elements of perfect competition

• less firms in market

• some sort of product differentiation

• some barriers to entry & exit

• suppliers can influence prices

a market structure in which many companies sell differentiated products, barriers to entry are low, easy for firms to enter market, mix between monopoly power and competition leads to term monopolistic competition

• firms have some power to influence price

• monopoly has least competition ( price inelastic)

price leaders charge high prices but often restricted from doing so by the government, government refers to business with at least 25% market share as monopoly

an oligopoly consisting of only two firms

A market structure in which a few large firms dominate a market, not tend to compete on price in the long run, speand heavily on new products and branding

to enable workers who are willing and able to sell their labour to meet employers who are willing and able to give them a job

education and training, taxes and benefits, working age/retirement, migration, employment laws

derived demand, demand for goods/services, improvement in techology, profit and market structure

the difference between the wage received by one worker or group of workers and that received by another worker or group of workers

age/experience, qualifications, responsibilities, location, public/private sector, discrimination

availabilility of skilled workers, demand for goods/services, safety, working conditions/environment, profit of firms, non financial benefits, market structure