Unit 4 Key Terms - Edexcel International A Level Economics

the proportion of any given population actually in the workforce

where the goods produced satisfy consumer preferences and maximise their welfare

the average cost of production per unit // AVC+AFC

TFC÷Q

the quantity of output per unit of factor input // total product÷level of output

the average receipts per unit sold // TR÷Q

TVC÷Q

a joining together into one firm of two or more firms where the purchaser merges with/takes over one or more of its suppliers

factors which make it difficult/impossible for firms to enter an industry and compete with existing producers

factors which make it difficult/impossible for firms to leave a market and cease production

when a single buyer faces a single seller in a market

a name, design, symbol or other feature that distinguishes a product from another and makes it non-homogenous

a formal agreement between firms to limit competition in order to maximise profits

collective agreements, be it tacit or formal, between firms that restrict competition

a market with a high concentration ratio where a few interdependent firms cooperate (either formally or tacitly) to restrict competition

introducing competition among private sector firms which put in bids for work contracted out by public sector firms

a market with a high concentration ratio

the market share of the largest firms in the industry

a joining together into one firm of two or more firms producing unrelated products

exists when the economic system allocates resources totally according to consumer preference

a market with freedom of entry and where the costs of exit are low

getting private sector firms to produce goods and services then provided by the state

where firms produce/create new products that replace existing products on the market

when a firm splits into two or more independent businesses

the process of removing government controls from markets

a rise in the long run average costs of a firm as production increases

when managers and directors of a business are different from the owners of a business (the shareholders)

the strategy that has the best outcome in light of the decisions of other players

a market with only two firms

where investment reduces the long run average cost curve

the opportunity cost of an input into the production process

the number of workers in the workforce either in a job or unemployed

a fall in long run average costs of production as output rises

responsiveness of the quantity demanded of labour to changes in the price of labour // Δ%Q or labour÷Δ%Wage rate

where the average cost of a firms production falls due to growth in the size of the industry in which the firm operates

costs which do not vary as the level of production changes

a joining together into one firm of two or more firms where the supplier merges with/takes over one or more of its buyers

the analysis of situations in which players are interdependent

when firms can enter a market at low cost attracted by high profits and then leave at low cost when profits fall

identical goods made by different firms

a joining together of two firms in the same industry at the same stage of production

an economic cost which a firm does not pay for with money to another firm, but is the opportunity cost of the factors of production which the firm itself owns

where the actions of one firm has no significant impact on any other firms in the market

where the actions of one firm have an impact on other firms in the market

economies of scale which arise due to growth in the scale of production within a firm

those economically active and therefore in or seeking work

if increasing quantities of a variable input are combined with a fixed input, eventually the marginal product and then the average product of that variable input will decline.

when a firm sets a low enough pricing to deter new entrants into a market

the period of time when all factors of production can vary, as does the number of firms in the market, but the level of technology remains constant

the cost of producing an extra unit of output

the physical addition to output of an extra unit of a variable factor of production

the addition to output produced by an extra unit of input // Δtotal output÷Δlevel of inputs

the value of the physical addition to outputof an extra unit of a variable factor of production

the addition to total revenue of an extra unit sold // ΔTR÷ΔQ

the degree to which the output of a market is dominated by the largest firms

the behaviour of firms, eg. through pricing strategies, marketing, branding and collusion

the proportion of sales in a market taken by a firm/group of firms

the characteristics of a market that determine the behaviour of firms in the market

different elements of a marketing strategy designed to increase demand

the joining together of two or more firms under common ownership

the lowest level of output at which long run average costs are minimised

a legal minimum wage per hour that employers must pay their workers

a firm that controls all the output in a market

a market structure where a large number of small firms produce non-homogenous products and where there are no barriers to entry

when firms are able to control the price they charge for their product

a market structure where ine firm supplies all output in the market without facing competition due to high barriers to entry

when there is only one buyer in a market

the sole producer in an industry has multiple places of production which can be sold off to create competition

the transfer of assets from the private to public sector

where economies of scale are so large relative to market demand that the dominant producer will always enjoy lower costs of production than any competitors

immigration-emigration

a small segment of a larger market

an oligopoly where firms compete amongst themselves and there is no collusion

goods that are similar but not identical, for example through use of branding

the amount of profit required to keep all factors of production employed in their current use in the long run (AKA Break-Even point)

organisations that do not aim to make a profit; rather, they use any profit or surplus they generate to support their aims (eg. a charity)

a market structure with a small number of interdependent firms

the range of output over which long run average costs are lowest

the outcome that maximises utility

a firm increasing its size through investment in capital equipment/an increased labour force

agreements between firms to reduce competition eg. through forming cartels

a matrix showing the outcomes of a game for players given different possible strategies

market structure where there are many buyers and sellers, freedom of entry and exit, perfect knowledge and where all firms produce a homogenous product

when all buyers are fully informed of all prices and quantities for sale, whilst producers have equal information to production techniques

size of the population between school leaving age and the state retirement age

a pricing strategy where a firm lowers its prices when a new entrant comes into a market in order to force the competitor to leave the market, then raises prices again

a type of collusion where two or more firms agree to fix the prices of their products

charging different prices for the same good/service in different markets

a firm which sets its price based on the price of the price leader

where a 'price leader' sets its own price and other firms set their own price in relationship to that firm

a firm with no control over market price and must accept the market price if it wants to sell its product

a situation where several firms in a market repeatedly lower prices to outcompete other firms

a game where, given that neither player knows the strategy of the other, the dominant strategy leads to a different result than the optimal outcome

organisations owned by individuals or companies rather than the state

the transfer of assets from the public to private sector

aspects of a good/service that distinguish a product from its competition, for example through packaging or marketing

production at the lowest average cost

when profit is at its highest // MR=MC

making sufficient profit to satisfy the demands of owners eg. shareholders

organisations owned and controlled by the state