Business studies and economics unit 4 5.0 / 5 based on 2 ratings ? Business Studies & EconomicsUnit 4A2/A-levelEdexcel Created by: HarryCreated on: 17-06-14 11:49 Market failure A situation where free market forces have led to an inefficient allocation of resources 1 of 27 Merit goods Positive externalities but under-consumed 2 of 27 De-merit goods Negative externalities but over-consumed 3 of 27 Public goods Non-excludability and non-rivalry 4 of 27 Equity A fair or just distribution of income or wealth 5 of 27 Externalities Include all costs and benefits that affect third parties 6 of 27 Cost benefit analysis Investigating all the private and external costs and benefits of a possible project 7 of 27 Collusion Agreeing with competing producers to avoid any action that would make the competition stiffer 8 of 27 A cartel An agreement not to compete bewteen two or more producers within an industry, typically agree to coordinate prices and production 9 of 27 Tacit collusion Competing firms avoidprice cutting strategies in order to be able to charge prices that guarantee good profits 10 of 27 A natural monopoly When there is great scope for economies of scale to be exploited over a very large range of ouput 11 of 27 The Office of Fair Trading Set up in 1973 to make markets work for the benefits of the consumer 12 of 27 Public interest The interests of society as a whole 13 of 27 The Competition Commission An independent public body that regulates monopolies and market competition 14 of 27 Regulatory capture Occurs when a regulator looks at an industry from the industry's point of view rather than the regulator's 15 of 27 Government failure When government intervention makes the situation worse rather than better 16 of 27 Monetary policy Uses quantitative easing and interest rates to influence the level of consumption, investment and aggregate demand 17 of 27 Fiscal policy Involves changes in taxation, government expenditure and public borrowing 18 of 27 Supply side policies Work to expand output by making markets work more efficiently 19 of 27 Human capital Refers to skills, training and experience embodied in individual people 20 of 27 Demand-pull inflation A general rise in prices caused by excessive aggregate demand 21 of 27 Cost-push inflation Caused by rising costs of production that are passed on to consumers 22 of 27 The poverty trap Where unemployed people are better off claiming benefits than entering full-time employment 23 of 27 Absolute poverty When incomes are insufficient to provide basic necessities such as food, clothing, shelter, education and healthcare 24 of 27 Relative poverty When one's income is lower than 60% of the national average 25 of 27 Regressive taxes Take a higher percentage of total income from poorer people as its the same for everyone 26 of 27 Progressive taxes Take a higher percentage of total income from the better off as it changes 27 of 27
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