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Definition
Occurs when the total revenue is greater than the total costs
Super normal profits |
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| A tax placed on the producer that is a percentage of the price |
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Definition
| Occurs when the price paid by the customer equals the social marginal cost of producing the good |
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Definition
Occurs when one individual/organization knows more about an issue than another
Eg. The seller has more information not available to the buyers |
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Definition
The cost per unit
(Average total cost) |
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Definition
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| Anything that makes it difficult for other firms to enter a market |
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Definition
| This is the output at which the total revenue equals the total cost |
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Definition
| This occurs when the firm's in an oligopoly collude when getting prices and outputs |
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Definition
This occurs when several firms that dominate an industry act together
Eg. When setting the price or quantity |
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Definition
| A business organization that has its own legal identity; it is owned by shareholders who have limited liability |
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Definition
| Occurs when one good is demanded in conjunction with another |
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Definition
| The 'n' firm concentration ratio measures the market share of the largest 'n' firms in a markets |
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Definition
| The difference between the price charged for a product and the utility that consumers derive from it |
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Definition
| A method of investment appraisal that takes account of social costs and benefits |
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Term
Cross price elasticity of demand
XED |
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Definition
| Measures the responsiveness of demand for one product in relation to changes in the price of another |
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Term
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Definition
| Shows the quantity demanded at each and every price, all other factors being unchanged |
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Term
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Definition
Occurs when the demand for something is derived from the demand for something else.
Eg. Employers demand labour because their products are demanded |
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Term
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Definition
| Occurs when the extra output produced falls as more units of the variable factor are added |
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Term
| Diseconomies of scale (external) |
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Definition
| Occur when a firm's unit costs increase at every level of output due to an increase in the size of the industry as a whole |
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Term
| Diseconomies of scale (internal) |
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Definition
| Occur when there are increases in the long run average costs as the scale of production increases |
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Term
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Definition
| Occurs when individuals are willing to take the risks to produce new ideas or introduce new processes |
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Term
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Definition
| Occurs when there is a state of balance and there is no incentive for change |
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Term
| External economies of scale |
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Definition
| Occurs when a firm's unit costs fall at every level of output due to an increase in the size of the industry as a whole |
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Term
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Definition
| Occurs when there is a difference between private and social costs and benefits |
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Term
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Definition
| Costs that do not change with the amount of products produced |
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Term
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Definition
| Occurs when it is not possible to exclude individuals from consumption of a product |
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Term
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Definition
| Involves the study of alternative |
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Term
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Definition
| Occurs when firms enter a market attracted by high profits and then leave when they are competed away |
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Term
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Definition
Occurs when two or more firms at the same stage of the same production process are integrated
Eg. Takeover or merger |
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Term
Income elasticity of demand
YED |
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Definition
| Measures the responsiveness of the demand for a product in relation to changes to income |
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Term
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Definition
| These have a negative income elasticity of demand. Demand falls as income increases, and a negative price elasticity of demand. A higher price leads to a lower quantity demanded |
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Term
| Internal economies of scale |
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Definition
| Occurs when there are reductions in a firm's long run average costs as the scale of production increases |
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Term
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Definition
Occurs when the supply of one product is linked to the supply of another
Eg. An increase in the supply of beef increases the supply of hides |
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Term
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Definition
| Tis is a model of oligopoly; demand is assumed to be price elastic above the existing price and price inelastic below the existing price |
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Term
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Definition
| The period of time when all of the factors of production are variable |
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Definition
| The extra cost of producing an extra unit |
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Definition
| The extra revenue earned by selling another unit |
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Term
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Definition
| Measures the value of the output produced by employing an extra worker |
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Term
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Definition
| This is the extra satisfaction gained from consuming another unit |
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Term
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Definition
| This is a product that is underinsured in the free market because it's external benefits are not appreciated or known by customers |
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Term
| Monopolisitic competition |
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Definition
| A market structure in which there are many firms but each offers a differentiated product |
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Definition
| A firm that dominates a market |
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Definition
| A company that has production bases in more that one country |
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Term
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Definition
| This occurs when it is not possible to prevent someone from consuming a product |
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Term
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Definition
| Normal goods gave a negative price elasticity of demand and a positive income elasticity of demand |
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Term
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Definition
| Occurs when the total revenue equals the total costs |
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Term
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Definition
This is a target
Eg. To maximise profits |
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Term
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Definition
| A market structure in which a few firms dominate the market |
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Term
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Definition
| The next best alternative forgone |
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Term
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Definition
| This is a market structure with many firms, freedoms of entry and exit, where firms produce identical products and where firms are price takers |
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Term
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Definition
| Occurs when different prices are charged to different customers for the same product |
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Term
| Price elasticity of demand |
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Definition
| Measures the responsiveness of the demand for a probe in relation to changed in its price |
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Term
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Definition
| Measures the responsiveness of the supply fora product in relation to changes in its price |
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Term
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Definition
| The difference between the price paid to producers for products and the cost of producing the items |
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Term
| Production possibility frontier |
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Definition
| Shows the maximum combination of production that an economy can produce given its resources |
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Term
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Definition
| Occurs when more of one product can only be produced if less of another product is produced. It also occurs when a firm produces at the minimum of the average cost curve, that is, at the lowest cost per unit possible |
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Term
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Definition
| A tax system where the average rate of tax increases as income increases |
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Term
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Definition
| A tax system where the average rate of tax is constant as income increases |
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Term
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Definition
| A product that is non-diminishable and non-excludable |
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Definition
| The period of time when at least one factor of production is fixed |
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Definition
| Occurs when price is the minimum of average variable cost;a firm would shut down if the price fell below the average variable cost |
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Term
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Definition
| The private costs plus external costs |
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Term
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Definition
| These are the same as abnormal profits. They occur when the price is greater than the average cost |
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Term
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Definition
| Shows the quantity that producers are willing and able to produc at each and every price, all factors being unchanged |
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Term
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Definition
| This refers to the ability of the economy to survive to produce in the long run |
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Term
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Definition
| This occurs when one business buys control of another |
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Term
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Definition
| The total cost at any level of output equals the fixed costs plus the variable costs |
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Term
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Definition
| The value of scales (calculated as the price of a product multiplied by the quantity sold) |
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Term
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Definition
| This is an organization that represents employees;it aims to protect employees' rights and promote their interests |
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Term
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Definition
| The satisfaction that a consumer would receive from consuming s product |
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Term
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Definition
| Occurs when two or more firms at different stages of the same production process are integrated |
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