Economics

• Arguments for PRIVATISATION:Private firms aim to make PROFIT. This means they need to operate the business efficiently and ensure resources are allocated in the best possible way. Governments don't need to worry about profit, so they may be running the business inefficiently.

  Firms need to attract customers so have an INCENTIVE to improve the service.Argument against privatisation:

  Firm may make some workers redundant.

  May increase prices which is bad for consumers

  Firm doesn't have an incentive to improve quality of the service if the industry is a monopoly. (operated by a single firm).
• Key terms Externalities - the spillover effects of consumption or production. They affect others and can be positive or negative.

  Private benefit - the rewards to individuals or firms of an economic activity such as consumption or production.

  Private cost - the cost of an economic activity to individuals and firms.

  Social benefit - the benefit of an economic activity to society as well as to the individual or firm.

  Social cost - the cost of an economic activity to society as well as the individual or firm.
• Social benefit= Private benefit+ External benefit
• Social cost= Private cost+ External cost
• Land - Natural resources

  Labour - Human work or effort

  Capital - Man made aids to production

  Enterprise - The idea/person that combines the land,  labour and capital in order to produce
• Primary - production involves the extraction of raw materials

  Secondary - (manufacturing) production that involves converting raw materials into finished or semi-finished goods.

  Tertiary - production of services
• GDP- The market value of all finished goods and services produced in a country over a period of time.
• The Human Development Index- A statistical composite index of life expectancy, education, and per capita income indicators, which is used to rank countries into four tiers of human development.
• Productivity is the output per input in a period of time. Labour productivity measures the output per worker in a period of time. If productivity rises, firms can produce more with the same number of workers. This enables. Higher wages for workers.
• Division of Labour - The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency.
• Fixed costs: are costs that do not change with the amount you produce.
• Variable costs: are costs that do change according to output.(The more bread you want you make, the more ingredients and workers you need.)
• Total costs= Fixed costs + variable costs
• Average cost= Total cost/quantity of output
• Average cost represents the cost per unit of output
• Average fixed cost= Fixed cost/quantity of output
•  

  Average variable cost= Variable cost/Quantity of output
• Total revenue= Quantity x Price
• Revenue is the amount a firm makes SALES
• Profit= Total revenue - total costs
• Trade unions are organisations that exist to protect the interests of workers.
• Aims of a trade union:

  • Negotiate pay and working conditions with employers.
  • Provide legal protection for members in court against employer.
  • Put pressure on the government to pass legislation that improves the rights of workers.
  • Provide financial benefits, such as strike pay whenever necessary.