Economics of Work and Leisure

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wages + overtime pay, bonuses and commission
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Economically Inactive
working age people whoa re neither in employment nor unemployed and so are not part of the labour force
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Labour Force Participation Rate
the proportion of working age people who are economically active
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Employment Rate
the propertion of people of working age who are in work
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the group of major economics: canada, france germany, italy, russia, uk, usa
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Part-timer Workers
people working less than 30 hours a week
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Temporary Work
casual work, seasonal work, working for employment agencies, fixed-period contract work
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working either from home or in different places from the central office
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working using a telephone and a computer at home, in an internet cafe or train or plane
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Occupational Segregation
the dominance of an occupation by one gender
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Tax Wedge
the gap between what employers pay for labour and what workers recieve in disposable income
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subcontracting part of production process to another firm
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transferring part of the process to another country, the production may be outsourced or may be undertaken by another firm in a dif country
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a single seller
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Market Concentration Ratio
the % share of the market of a given number of firms
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Short Run
the time period when at least one factor of production, usually capital, is in fixed supply
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Fixed Costs
costs that do not change in the SR with changes in output
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Variable Costs
costs that change with changes in output
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Average Cost
total cost / output (also called unit cost)
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Average Fixed Cost
total fixed cost / output
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Av Variable Cost
av v cost / output
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Marginal Cost
the change in total cost resulting from changing output by one unit
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Long Run
the period of time when it is possible to alter all factors of production
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Economy of Scale
a reduction in LR AC resulting from an increase in the scale of production
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Diseconomy of Scale
an increase in LR AC caused by an increase in the scale of production
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Minimum Efficient Scale
the lowest level of output at which full advantage can be ttaken of economies of scale
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Constant Returns to Scale
LR AC remaining unchanged when the scale of production increases
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Internal Economics of Scale
EoS that occur within the firm as a result of its growth
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External Economies of Scale
economies of scale that result from the growth of an industry and benefit firms within the industry
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Internal DEoS
diseconomies oS experienced by a firm caused by its growth
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External DEoS
diseconomies oS resulting from the growth of the industry, affecting firms within the industry
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Average Revenue
total revenue / output
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Marginal Revenue
the change in total revenue resulting in sale of one more unit
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Perfect Competition
a market structure with many buyers and sellers, free entry + exit and identical prouct
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Price Taker
a firm that has no influence on price
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Price Maker
a firm that influences price when it changes its output
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Unit Elasticity of Demand
when a given % change in price causes and equal % change in demand, leaving total revenure unchanged
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Predatory Pricing
setting price low with the aim of forcing rivals out the market
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Superior Good
a good with positive income elasticity of demand greater than 1
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Barriers to Entry
obstacles to new firms entering a market
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Barriers to Exit
obstacles to firms leaving a market
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Sunk Costs
costs incurred by a firm that it cannot recover should it leave the market
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Limit Pricing
setting a price low to discourage the entry of new firms into the market
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Profit Maximisation
achieving the highest possible profit where MC=MR
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Supernormal Profit
profit earned where AR>AC
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Normal Profit
the level of profit needed to keep a firm in the market in the long run
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Natural Monopoly
a market where LRAC are lowest when output is produced by one firm
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Legal Monopoly
a market where a firm has a share of 25% or more
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Dominant Monopoly
a market where a firm has a 40% or more share
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a market structure dominated by a few large firms
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Kinked Demand Curve
a demand curve made up of 2 parts; suggest oligopolists follow each others price reductions but not price rises
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a group of firms that produce seperately but sell at one agreed price
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Game Theory
a theory of how decision makers are influenced by the actions and reactions of others
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Contestable Market
a market in which there are no barriers to entry or exit and the costs facing incumbent and new firms are equal
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Hit-and-Run Competition
firms quickly entering a market when there are supernormal profits and leaving it when the profits disappear
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Sales Revenue Maximisation
the objective of achieving as high a total revenue as possible
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Growth Maximisation
the objective of increasing the size of the firm as much as possible
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Profit Satisficing
aiming for a satisfactory level of profit rather than the highest level of profit
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people affected by the activities of a firm
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Utility Maximisation
the aim of trying to achieve as much satisfaction as possible
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Derived Demand
demand for one item depending on the demand for another item
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(marginal revenue product) the change in a firms revenue resulting fro employing one more worker
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(marginal product of labour) the change in output that results from employing one more worker. MPxMR
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Flexible Labour Market
a labour market that adjusts quickly and smoothly to changes in the demand for and supply of labour
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Backward-Sloping Labour Supply Curve
a labour supply curve showing the substitution effect dominating at low wages and the income effect dominating at high wages
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Income Effect of a Wage Rise
the effect on the supply of labour caused by the change in the ability to buy leisure
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Substitution Effect
the effect on the supply of labour caused by a change in the opportunity cost of leisure
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Elasticity of Supply of Labour
the responsiveness of the supply of labour to a change in the wage rate
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Human Capital
the skills, knowledge and experience that workers possess
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Economic Rent
a surplus paid to a factor of production above what is needed to keep it in its current occupation
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Transfer Earnings
the amount of factor of production could earn in its best alternative occupation; the minimum amount that has to be paid to ensure that a worker stays in her/his present job: if her/his wage falls below this level s/he will transfer to the alernative
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a single buyer
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one of a few dominant buyers
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Bilateral Monopoly
a market with a single buyer and seller
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Disequilibrium Unemployment
unemployment caused by the AS of labour exceeding AD of labour
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Equilibrium Unemployment
unemployment that exists when the labour market is in equilibrium
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Non-accelerating inflation rate of unemployment (NAIRU)
NAIRU the level of unemployment that exists when the labour market is in equilibrium
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Geographical immobility of labour
barriers to the movement of workers between different areas
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Occupational immobility of labour
barriers to workers changing occupations
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Gini Coefficient
used to make international comparisons of income inequality, found by using lorenz curve
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Lorenz Curve
a diagram commonly used to illustrate income or wealth distribution
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Absolute Poverty
the inability to purchase the basic necessities of life
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Relative Poverty
a situation of being poor relative to others
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Dependancy Ratio
proportion of the population who are too young, too old or too sick to work and so who are reliant on the ouput of those who are working
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Card 2


Economically Inactive


working age people whoa re neither in employment nor unemployed and so are not part of the labour force

Card 3


Labour Force Participation Rate


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Card 4


Employment Rate


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