Unit 3 Vocabulary - Edexcel International A Level Economics

A firm owned, controlled and operated by a group o users, such as workers, for their own benefit.

Where a seperate business entity is created by two or more parties where ownership, returns and risks are shared.

A type of business organisation where the owners are its shareholders and its owner’s identity and the company’s identity are legally seperate.

Organisations that do not have making a profit as a goal but may use any profit or surplus they generate to support their aims.

A type of business organisation where two or more people own the business.

Organisations that are owned by individuals or companies and not the state.

Large organisations that are created by a country's government to carry out commercial activities.

A business owned and operated by one person.

A joining together of two or more firms into one firm, where the purchaser merges with one or more of its suppliers.

A joining together into one firm of two or more firms producing unrelated products.

When a firm splits into two or more independent businesses.

A joining together of two or more firms into one firm, where the supplier merges with one or more of its buyers.

A joining together of two or more firms in the same industry at the same stage of production.

The joining together of two or more firms under common ownership.

A market for a product or service that does not have many buyers but that may make good profits for companies that sell it.

A firm increasing its size through investtment in capital equipment or an increased labour force.

When two or more ctivities or firms put together cn lead to greater outcomes that the sum of the invididual parts.

A joining together into one firm of two or more firms at different stages of production in the same industry.

A technique adopted by firms of fixing a price for their products by adding a fixed percentage proit margin to the long-run average cost of production.

Occurs when the managers and directors of a business are a different group of people ffrom the owners of the business.

Occurs when the diffference between total revenue and total cost is the greatest (MR=MC)

Making sufficient profit to satisfy the demands of the owners (e.g. shareholders)

Occurs when total revenue is the highest and when marginal revenue equals zero (MR=0).

Occurs when the volume of sales is the greatest (AR=AC).

The average amount recieved per unit sold.

Total Revenue ÷ Total Quantity Sold

The extra revenue recieved from the sale of one extra unit of output.

The total money received from the sale of any amount of output.

• The cost of production per unit.

• Total Cost of Production ÷ Quantity Sold

• Average Variable Cost + Average Fixed Cost

The quantity of output per unit of factor input.

Total Product ÷ Total Level of Output

Total Variable Cost ÷ Number of Units Produced

The inputs to the production process.

An economic cost which a firm does not pay for with money to another firm but is the opportunity cost of factors of production which the firm owns.

If increasing quantities of a variable input are combined with a fixed input, eventually the marginal product and then the average product of that variable input will decline.

The addition to output produced by an extra unit of input.

Change in the Total Output ÷ Change in the Level of Inputs

The change in percentage output resulting from a percentage change in all factors of production.

If the percentage increase in output is greater than the percentage increase in the factors used.

If the percentage increase in output is equal to the percentage increase in the factors used.

If the percentage increase in output is lower than the percentage increase in the factors used.

The cost of producing any given level of output.

Total Variable Cost + Total Fixed Cost

The value of the cost of production which does no vary however many units are produced.

A rise in the long run average costs of production as output rises.

A fall in the long-run average costs of production as output rises.

Falling average costs of production which is the result of the growth in the size of the industry within which a firm operates.

Economies of Scale which arise because of the growth in the scale of production within a firm.

The profit the firm could make by using its resources in their next best use.

When normal profit is not being earned in the long run.

When variable costs are not being covered

AR>SRAVC

Whether resources are allocated to those goods and services demanded by consumer and satisfy their wants and needs.

When production is achieved at the lowest average cost.

When resources are allocated efficiently over time through investment.

When a firm is not producing at the lowest possible cost for a given output level due to lack of competition.

Factors which make it difficult or impossible for ffirms to enter and industry and compete with existing producers.

Factors which make it difficult for firms to cease production and leave an industry.

The market share of the largest firms in an industry.

Goods made by many differernt firms which are identitical.

Where all buyers in a market are fully informed of prices and quantity for sale, which producers have equal access to information about production techniques.

The level of well being, prosperity, or living stands of an. individual or group of individuals.

• A market structure where there many many buyers and sellers,

• freedom of entry and exit into the market,

• there is perfect knowledge,

• firms produce a homogeneous product.

• A market structure where a large number of small firms

• produces non-homogenous products

  • and where there are no barriers to entry or exit.

A group of firms that have made a formal agreement to limit competition in the market.

Collective agreements either formaal or tacit, between firms that restrict competition,

A market structure where there is a small number of interdependent firms in the industry.

A firm which controls all the output in a market.

Market structure where one firm supplies all output in a market without facing competition because of high barriers to entry to the market.

Exists when firms are able to control the price they charge for their product in a market.

Where there is only one buyer in the market.

A monopoly that arises due to continuing falling economies of scale.

Charging a different price for the same good or service in different markets.

A market where there is freedom of entry to the industry and where costs of exit are low.

Costs which cannot be recovered when a firm leaves an industry.

The value of the physical addition to output of an extra unit of a variable factor of production.

The total output of a given quantity of factors of production.

Also known as the Activity Rate, it is the percentage or proportion of any given population ni the labour force.

The number of workers in the workforce who are in a job or are unemployed.

Where people are not able to work as many hours as they would like, or are in jobs that are below their skill level.

When a single buyer faces a single seller in a market.

When workers find it difficult to move from one area to another.

When workerrs find it difficult to transfer from one area to another.

When workers find it difficult to transfer from one occupation to another.

When the pattern of demand and production changes, leaving workers unemployed in shrunk markets.

Introducing competition among private sector firms which put in bids for work that has been contracted out by the public sectors.

The transfer of firms or assets from private sector ownership to state ownership

The transfer of organisations or assets ffrom state ownership to private sector ownership. R

An example of government failure, it occurs when firms in an industry are able to influence to their advantage a regulatory body that should be regulating their behaviour.

A legal maximum wage rate per hour or total pay.

A Legal minimum wage rate per hour which employers must pay their workers.