4781701
Description
Flashcards by Harry Holmes, updated more than 1 year ago
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Created by Harry Holmes
about 8 years ago
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| Question | Answer |
| Transport | The movement of people and goods for personal and business reasons |
| Mode of Transport | The means and method of movement |
| Infrastructure | Anything that provides for the operation of transport |
| Derived Demand | Demand that depends upon the final output that is produced |
| Privatisation | Sale of state-owned business activity to the private sector |
| Forecast | A future estimate based on past experience |
| Costs | The value of inputs |
| Fixed Costs | Costs that are independent of output produced |
| Variable Costs | Costs that are directly related to the level of output produced |
| Total Cost | The total cost of production or provision of a service |
| Average Cost | The unit cost of production |
| Marginal Cost | The change in total cost when one more unit of output is produced |
| Revenue | Receipts from sales |
| Total Revenue | Quantity x Price |
| Price Taker | A firm in a competitive market that has to accept the market price |
| Price Maker | A firm that has control over the market price |
| Average Revenue | Total Revenue / Quantity |
| Marginal Revenue | Addition to total revenue from one additional sale |
| Short Run | Time period when a firm is unable to change factors of production except for one, usually labour |
| Long Run | Time period when all factor inputs can be changed |
| Minimum Efficient Scale | The lowest level of output where long-run average cost (LRAC) is minimised |
| Economies of Scale | The benefits gained through producing on a larger scale |
| Technical Economies | Increased capacity or a technological development that results in lower long-run average cost. |
| Purchasing Economies | Reduced unit costs due to bulk buying of inputs into a business |
| Managerial Economies | Savings in long-run average costs due to the specialisation of management |
| Financial Economies | The cost savings that large firms may receive when borrowing money |
| External Economies | Falling long-run average costs that benefit all firms in an industry |
| Diseconomies of Scale | Causes of an increase in long-run average cost beyond the point of minimum efficient scale |
| Profit Satisficing | Where a firm makes a reasonable level of profit that satisfies its stakeholders without profit maximising |
| Revenue Maximisation | An objective where a firm produces where marginal revenue is zero |
| Profit Maximisation | The objective of a firm that is achieved where marginal cost = marginal revenue |
| Sales Maximisation | An objective that involves the maximisation of the volume of sales. Where AC = AR |
| Cross-Subsidisation | A business practice where revenue from profitable activities is used to support loss-making ones |
| Profit | The difference between revenue and costs |
| Normal Profit | The level of profit that keeps a firm in a particular activity |
| Supernormal Profit | Profit that is more than normal profit |
| Market Structure | The characteristics of a market |
| Concentration Ratio | The proportion of the total market share between the nth largest firms |
| Barriers to Entry | Obstacles to new firms entering a market |
| Allocative Efficiency | Where price is equal to marginal cost |
| Productive Efficiency | Using the least possible amount of scarce resources to produce the maximum output |
| Monopoly | A single firm in a market |
| Natural Monopoly | Where a monopolist has an overwhelming cost advantage |
| Dynamic Efficiency | Where unit costs are lowered over time |
| Contestable Market | A set of conditions where there is always the threat of new firms being able to enter a market |
| Price Discrimination | Where a monopolist charges different prices for the same product in different markets |
| Monopolistic Competition | A market structure with many firms producing a differentiated product and where there are few barriers to entry and exit |
| Product Differentiation | Where there are minor variations in the types of products on offer |
| Deadweight Loss | Loss to society of the firm producing where price exceeds marginal cost |
| Excess Capacity | A consequence of firms producing above the minimum point on the average cost curve |
| Non-Price Competition | Competition between firms on the basis of, for example, branding, customer service, location, range of products, advertising |
| Oligopoly | A market dominated by a few large firms |
| Interdependent | Where the actions of one firm provoke counter-action by others |
| Kinked Demand | Indicative of price rigidity in oligopoly |
| Game Theory | A means of modelling the behaviour of firms |
| Collusion | Where firms tacitly or otherwise agree to not compete on prices, service provision and other matters that might adversely affect mutual well-being |
| Contestability | The extent to which barriers to entry and exit in a market are free and costless |
| Sunk Costs | Those costs that cannot be recovered if a firm ceases operation |
| "Hit and Run" Entry | The way in which a firm enters a market where supernormal profits are being earned and leaves when profits return to normal |
| Deregulation | Removal of regulations |
| Franchise | The outcome of a competitive system to bid for the provision of services |
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