Economics (Fach) / Konzepte (Lektion)
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konzepte
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- Other determinants of demand: - Taste - Number and Price of Substitute Goods - Number and Price of Complementary Goods - Income - Expectations of future price changes
- When the price of a good rises, the quantity demanded will fall: - Income Effect - Substitution Effect
- When the price of a good rises, the quantity supplied will also rise: - Willing to incur the higher costs per unit associated with producing more - Switch to producing this product and away from now less profitable ones - New Producers will be attracted into the market
- Other Determinants of Supply: - Costs of Production - Profitability of Substitutes in Supply - Profitability of Goods in Joint Supply - Random Shocks - Aims of Producers - Expectations of Future Price Changes
- Determinants of price elasticity of demand - Number and Closeness of Substitute Goods - Proportion of Income Spent - Time period
- Determinants of Price elasticity of Supply - Amount that costs rise as output rises - Time Period
- Features of a Product - Technical Standards - Quality Standards - Design Characteristics - Service Characteristics
- Reasons for Economies of Scale - Specialisation and Division of Labour (PEoS) - Indivisibilities (PEoS) - Container Principle (PEoS) - Greater Efficiency of Large Machines (PEoS) - By-Products (PEoS) - Multi-Stage Production (PEoS) - Organisational (Rationalising) - Spreading Overheads - Financial Economies - Economies of Scope
- Reasons for Diseconomies of Scale: - Management Problems (Coordination, longer lines of communication, lack of personal involvement) - Workers may feel alienated (jobs boring and repetitive) à poor motivation - Industrial Relations may deteriorate - Great Disruption if there are hold-ups in one part of the business
- Assumptions behind the LRAC- Curve: - Input Prices are given - State of technology and input quality are given - Firms operate efficiently
- Categories of Transactions Costs: - Search Costs - Contract Costs - Monitoring and Enforcement Costs - Transport and Handling Costs
- Barriers to the Entry of new Firms under Monopoly: - Economies of Scale (Natural Monopoly) - Economies of Scope - Product Differentiation and Brand Loyalty - Lower Costs for an Established Firm - Ownership of, or control over, key inputs or outlets - Legal Protection - Mergers and Takeovers - Retained Profits
- Reasons why a monopolist charges a price above the market price of an equivalent industry under Perfect Competition: - PC: price equals marginal cost; M: Price is above marginal cost - Supernormal profits are not competed away in the long run à not forced to operate at the bottom of the LRAC curve à long-run prices higher and output lower - M: cost curves higher because it does not have to use the most efficient technique
- Factors Favouring Collusion: - Very few firms, well known to each other - Open with each other - Similar Production Methods and Average costs - Similar products - Dominant firm - Barriers to entry - Stable market - Collusion is Legal
- Effect of Oligopoly on Consumer: - Extensive advertising - Product Differentiation à wider range of choice - Profits used for research and development - Less scope for Economies of Scale
- Conditions necessary for Price Discrimination: - Firm must be able to set its price - Markets must be separate - Demand Elasticity must differ in each market
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- Major Changes in UK Labour Market: - Shift from agricultural and manufacturing to service-sector employment - Rise in part-time employment - Rise in female participation rates - Rise in the proportion of workers employed on fixed-term contracts, or on a temporary or casual basis - Downsizing
- Other Determinants of Labour Supply: - Number of Qualified people - Non-wage benefits or costs of the job - Wages and non-wage benefits in alternative jobs
- Other Determinants of Demand for Labour: - Productivity of Labour (MPP – Marginal Physical Output) - Demand for the Good (Derived Demand)
- Factors for elasticity of market demand for labour: - Price elasticity of demand for the good - Difficulty to substitute Labour for other inputs and vice versa - Wage Cost as a proportion of total costs - Time Period
- Reasons for the Efficiency Wage Hypothesis: - Less shirking - Reduced Labour turnover - Morale