OCR-Economics-Work & Leisure – Flashcards
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Earnings/Income
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a flow of money that accumulates over a time period from utilising the different factors of production.
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Real earnings/ income
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the value of a flow of money that accumulates over a time period from utilising the different factors of production after inflation has been taken into consideration.
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Unit labour costs
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cost of labour per unit of output produced
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Labour productivity
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Output per worker per time period, the amount of output an individual will produce over a given time period.
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Market concentration ratio
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Measures the amount of firms in a market and how much power they have within that market.
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Economically active
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Those in employment plus those unemployed
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Economically inactive
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Working age people who are neither employed, unemployed and so not part of the labour force
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Labour force participation rate
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The proportion of working age people who are economically active
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Employment rate
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The proportion of working-age people who are in work
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Leisure
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An experience that occurs outside working hours within the time when people are free to select whatever they do.
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Total costs
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the total cost a firm will face for producing a given output.
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Average costs
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the cost of producing each unit of output produced- calculated by .... Total costs/ output.
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Marginal costs
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The costs a firm will incur for producing one extra unit of output.
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Total Revenue
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the total amount of money a firm will receive for selling a given output.
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Average Revenue
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the selling price- the amount of revenue a firm will receive for selling one unit of output.
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Marginal revenue
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the amount of revenue a firm will receive for selling one extra unit of output.
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Short run
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The time period where at least one factor of production remains constant or in fixed supply (normally capital)
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Long run
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The time period where all factors of production are able to change
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Economies of scale
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the decrease in a firms average cost in the long run due to a surge in a firms overall productivity.
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Diseconomies of scale
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The increase in a firm's long run costs due to a surge in their overall productivity.
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Profit maximisation
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A firm's objective of making as much profit as possible (found where MR=MC) (profit= AR-AC)
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Normal profit
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profit that is enough to survive in the LR (AR=AC)
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Abnormal profit
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anything above normal profit (AR>AC)
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Monopoly
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Market structures where there is one main firm that dominates the market.
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Oligopoly
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Market structure where three to five main firms dominate the market and there is strong brand loyalty.
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Concentration Ratio
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the market share of a given number of dominant firms
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Monopolistic competition
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Market structures where there are many firms in the market.
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Legal monopoly
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a monopoly where the main firm has over 25% of market power.
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Dominant monopoly
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a monopoly where the main firm has over 40% market powers.
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Contestable market
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a market structure where there are no barriers to entry or exit and all costs are the same for both incumbent firms and new firms.
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Allocative efficiency
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where the consumers demands and wants are taken into account and there's an even distribution of goods and services- found where AR=MC- the price that consumers pay for the good is equal to the marginal utility they get from consuming it.
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Productive efficiency
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where firms employ 100% of their existing resources to the best of their ability. When firms work at the lowest point on their AC curve and on the edge of their PPF.
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Dynamic Efficiency
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the investment in cutting edge technology and research to give goods a unique slant- in order for this to be achieved firms must be earning supernormal profits in the short run to fund such investment and there must be imperfect information to hide research from rival firms.
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Regulation
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rules and regulations to restrict the consumption of demerit goods, reducing negative externalities and promoting the use of merit goods.
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Barriers to entry
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obstacles such as start up costs, limit pricing, economies of scale, predatory pricing and brand loyalty that stop new firms from entering a market.
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Barriers to exit
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obstacles- such as sunk costs, contracts, advertising campaigns that stop new firms from leaving the market.
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Sales revenue maximisation
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the objective of increasing a firms revenue as much as possible- costs aren't taken into account.
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Profit satisfying
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the objective of settling for lower profit than what could be achieved as firms may not want to decrease their costs by too much otherwise they'll have to cut back on labour costs which could anger employees.
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Growth maximisation
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the objective of increasing the size of a company as much as possible in the hope of increasing employment opportunities, seeming more powerful to rival firms.
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Labour demand
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the demand of labour by firms and markets
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Derived demand
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the demand for a factor of production based on the output of that factor.
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Marginal Revenue product
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the extra money that a firm will receive for the output produced by employing an extra worker.
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Elasticity of demand for labour
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the percentage change in a firms' demand for labour following a percentage change in the wage rate.
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Elasticity of supply of labour
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the percentage change in the supply of labour following a percentage change in the wage rate.
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Short run labour supply
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supply of labour when it isn't possible to change occupations.
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Long run labour supply
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the supply of labour when it is possible to change occupation.
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Backward bending supply curve
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a supply curve that describes how workers will change the quantity of leisure hours they employ following fluctuations in the hourly wage rate.
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Work/leisure trade-off
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the opportunity cost between leisure hours and work hours. The amount of leisure hours you'll sacrifice to employ more working hours and vice versa.
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Income effect
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when an increase in the wage rate causes workers to decrease the amount of hours they work in order to maintain their current income whilst gaining more leisure hours.
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Substitution effect
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when following an increase in the wage rate consumers choose to increase their working hours in a bid to further their income.
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Opportunity cost of leisure
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the amount of income an individual will lose by employing more leisure hours.
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Net advantages
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the total pecuniary and non pecuniary advantages subtracted by the total pecuniary and non pecuniary disadvantages of moving from one occupation to another.
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Pecuniary advantage-
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financial benefits of moving from one job to another.
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Non pecuniary advantages
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the non financial benefits involved in moving from one job to another.
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Human capital
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the skills and qualifications that an individual contains
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Transfer earnings
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the minimum amount of money needed to keep an individual in their current job.
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Economic rent
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the surplus amount of money that an individual gains after transfer earnings for being in an occupation.
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Quasi-rent
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the extension in the economic rent and transfer earnings following an increase in the demand for labour in an occupation.
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Labour Market Failure
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The misallocation of supply and demand labour resources
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Monopsony
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Labour market where there is a single buyer of labour
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Trade union
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An organisation that seeks to represent and protect its members against firms within the workplace as they seek to improve working conditions and pay. Also offers legal advice
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Trade union bargaining power
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the amount power a trade union will have against a firm to take action.
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Collective bargaining
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where a body speaks or negotiates on behalf of a group of people.
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Bi-lateral monopoly
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a market structure where there is a single buyer and a single seller.
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Imperfect information
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When information regarding the running of a firm is missing or incomplete
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Skill shortages
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When there aren't enough workers who contain the correct skills or qualifications to perform a job.
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Economic inactivity
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When people who are able (of the working age and physically able) to work are inactive- not seeking employment.
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Unemployment
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the term used to describe a group of people who are out of work but actively seeking employment.
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Discrimination
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Arises from a misallocation of supply and demand resources when an individual is ridiculed from being employed to fulfil a job due to their age, ethnicity, sex, disability or illness.
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Segmented labour market
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When the labour market is split into two sections
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Formal labour market
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Jobs that require a high level of skills and have high union power.
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Informal labour market
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low skills require- more people in this labour market than in the formal labour market.
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Geographical immobility
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the obstacle of being unable to move from one area to another in order to move occupations. Could be due to moving charges, cultural differences, family ties
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Occupational immobility
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The lack of skills and qualifications that stops an individual from moving from one occupation to another.
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Labour market Flexibility
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The ease over which a firm can adjust there resources to produce different products to adjust to changes in the economy.
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Wealth inequality
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the unequal holdings of wealth across the country. Wealth is a collection of assets that have financial value.
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Income inequality
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Unequal earnings of income across different groups of people or individuals across the country. Income is an accumulation of wages that an individual will collect within a time period.
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Absolute poverty
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The idea of being unable to afford basic amenities such as water, clothes or food. Loosely based on the theory of living off of less than a dollar a day.
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Relative poverty
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poverty that's relative to the environment that you live in - you're considered to be living in poverty if your income is less than 60% of average household income.
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Gini-co efficient
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a means of measuring poverty on an international level
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National Minimum wage
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the minimum wage rate - by law- that firms are allowed to pay their workers.
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Progressive taxation
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taxes that increase as you earn an higher income. Taxes that are set relative to your income.
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Regressive taxation
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taxation that is the same for everyone such as VAT.
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Universal benefits
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benefits that are available to everyone no matter how much wealth they have eg. Pensioner winter fuel
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Means tested benefits
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benefits that you only receive if your income is below a certain value.
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Pensions crisis
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Too many pensioners- following the baby boom. There aren't enough workers to support such pensioners and their pensions. High dependency ratio. People are living to an older age which means there are more older people within the UK.
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EU Directive
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EU legislation that sets certain regulations about employment- pregnancy leave, Discrimination, working hours etc...
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Net immigration
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Emigration- Immigration
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Lorenz curve
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a curve that displays how different proportions of the population hold different proportions of wealth.
