Econ Paper 1: Micro Econ and Business Econ

• Capital goods
• subsidiaries


  companies that are at least half owned by another company
• minimum wage


  minimum amount per hour which most workers are legally entitled to be paid
• anti-competitive prices


  attempts by firms to prevent or restrict competition.
• Wage rate
• Niche market


  market for a product or service, perhaps an expensive or unusual one, that does not have many buyers, but that may make good profits for companies that sell it
• Oligopoly


  Market dominated by a few large firms
• natural monopoly


  a market that runs most efficiently when one large firm supplies all of the output
• Price maker


  where a dominant firm is able to set the price charged in the whole market
• Pure monopoly


  when just one producer supplies a market
• Monopoly


  situation where there is one dominant seller in the market
• Barriers to entry


  Obstacles that might discourage a firm from entering a market.
• Competition


  the rivalry that exists between firms when trying to sell goods to the same group of consumers.
• "scale"


  size of a business
• External economies of scale


  The cost benefits that all firms in the industry can enjoy when the industry expands
• Internal economies of scale

  The cost benefits that an individual firm can enjoy when it expands.
• diseconomies of scale

  Rising average costs when a firm becomes too big
• Economies of scale

  Falling average costs due to expansion
• variable costs


  costs that change when output levels change
• Fixed costs


  costs that do not vary with the level of output
• Costs


  expenses that firms incur when they produce goods and services
• Specialization


  production of a limited range of goods by individuals, firms, etc.
• Division of labor


  breaking down of the production process into small parts with each worker allocated to a specific task
• Productivity


  the rate at which goods and services are produced
• Deindustrialization


  decline in manufacturing
• Factors of production


  resources used to produce goods and services
• External benefits

  positive spillover effects of consumption or production - they bring benefits to third parties
• External costs

  negative spillover effects of consumption or production - they affect third parties in a negative way
• Privatization


  the act of selling a company or activity owned by the government to private investors
• free rider problem


  individual who enjoys the benefit of a good but allows others to pay for it.
• Public goods


  goods that are not likely to be provided by the private sector
• Merit goods


  goods which are under-provided by the private sector
• Market failure


  where markets lead to inneficiency
• Mixed Economy


  relies on both the Public and private sector to provide goods and services.
• Public sector


  government organisations that provide goods and services in the economy
• Private sector


  goods and services that are owned by individuals or groups of individuals.
• Economy


  system that attempts to solve the basic economic problem.
• income elasticity of demand


  The responsiveness of demand to a change in income
• Price elasticity of supply


  the responsiveness of supply to a change in a good's own price.
• Price elasticity of Demand


  the responsiveness of demand to a change in a goods own price