3.1.1 Sizes and types of firms 3.1.2 Business growth 3.1.3 Demergers 3.2.1 Business objectives 3.3.1 Revenue 3.3.2 Costs 3.3.3 Economies and diseconomies of scale 3.3.4 Normal profits, supernormal profits and losses
When a business increases the size of its operations This could be: Internally Opening new stores Franchising Externally Mergers Takeovers
That sector of the economy that is owned and controlled by the government rather than individuals or groups of individuals
The sector of the economy that is owned and controlled by individuals or groups of individuals rather than by the government
A situation that occurs when there is a difficulty in getting one party, the manager or director, to work in the best interests of the principal party, the owners
The process of splitting a business into separate components
Targets that a business wants to achieve within a set period of time
The income received by a firm from selling goods and services
Expenditures incurred by a firm as part of the firm’s operations
The advantages enjoyed by a firm, when unit costs fall, as it increases the scale of production
The problems experienced when unit costs, or average cost per unit, rise as a firm increases the scale of production
The minimum level of profit required by a firm to continue to operate and remain competitive in a market
Profit in excess of normal profit that occurs when average revenue > average total cost (AR > ATC)
The situation where total costs made by a business are greater than total revenue
Understanding the business side of the economy how firms operate within the UK.
Group work and the development of research will help create an environment where students will support each other.
3.4.1 Efficiency 3.4.2 Perfect competition 3.4.3 Monopolistic competition3.4.4 Oligopoly 3.4.5 Monopoly 3.4.6 Monopsony 3.4.7 Contestability
When the maximum amount of products are produced at their minimum cost whilst maximising their benefit to society
A situation where a firm does not maximise the amount of products it produces, operates above minimum cost and does not maximise benefits to society
A hypothetical market structure where all firms sell homogenous products and are price takers
A type of imperfect competition with many firms selling differentiated products.
A type of market structure where a few firms dominate, the concentration ratio is high
A market structure where there is only one producer in an industry
A market structure where there is a sole (pure monopsony) or dominant buyer in the market
The degree to which markets are contestable i.e. the degree of freedom to enter or exit the market, the degree of sunk costs and the degree of perfect knowledge
Develop and understanding of different market structures and how they influence an economy.
Students work together to understand the concepts being introduced.
New Description
Demand for a factor of production such as labour as a result of demand for the final product that that factor of production can produce.
The amount of skill, knowledge, talent, experience and ability of workers. Human capital can be increased through education and training.
The ability of labour to move around an area, region or country in order to work. Geographical mobility is affected by things such as family ties, transport networks, transferable qualifications and common language.
The labour supply is the number of hours that people are willing and able to supply at a given wage rate. The labour supply curve for any industry or occupation will be upward sloping. As wages rise, other workers enter this industry attracted by the incentive of higher pay.
The difference between male and female earnings, usually expressed as a percentage of male earnings. In the UK, the gender pay gap is around 20%.
A wage that provides enough money for a working person to live decently and provide for their family.
A wage that is set below the equilibrium wage rate. In theory, the outcome would be an excess demand for labour, or a labour shortage.
A wage that is set above the equilibrium wage rate. In theory, the outcome would be an excess supply of labour, or unemployment – called the National Living Wage since 2016.
Zero Hours Contracts do not guarantee a minimum number of working hours each week. In the UK labour market, People on “zero-hours contracts” are more likely to be young, part time, women, or in full-time education when compared with other people in employment.
The difference in wages between workers. The term can refer to differences in wages between differently skilled workers in the same industry, or similar-skilled workers in different industries.
New Description
Main competition policy body in the UK. Their main stated aim is to make markets work well for consumers, businesses and the economy
The opening up of markets to competition by reducing one or more barriers to entry. The aim is to increase market supply, stimulate competition and innovation and drive prices down for consumers.
A doctrine that government should not interfere with actions of business and markets.
When a government takes over a private sector company.
The sale of state-owned companies to the private sector, normally through a stock market listing. The opposite of nationalisation.
When industries under the control of a regulatory body appear to operate in favour of the vested interest of monopoly producers rather than consumers.
Asymmetric information
4.1 International economics4.1.1 Globalisation4.1.2 Specialisation and trade4.1.3 Pattern of trade4.1.4 Terms of trade4.1.5 Trading blocs and the World Trade Organisation (WTO)4.1.6 Restrictions on free trade4.1.7 Balance of payments4.1.8 Exchange rates4.1.9 International competitiveness
The integration of international economies leading to a world market
When economic units, such as individuals, firms, regions or countries, concentrate on producing specific goods or services
Pattern of trade
The terms of trade is the ratio of export prices to import prices
Economic units formed when the governments of a group of countries agree to trade together freely i.e. normally with no trade barriers
An organisation whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers
The instruments of policy that are used by governments to limit the free movement of goods and services between countries
A record of a country’s trade in goods and services, investment income and transfers with the rest of the world
The way in which the value of a domestic currency e.g. £ is determined. Exchange rate systems include floating, fixed and managed exchange rates
The ability of a business to compete in global markets to become a leader in a given industry across the world
Student will get an appreciation of how international economies work together and the impact they have on developed and developing economies.
Through group discussion and independent learning, students will develop analytical and evaluative skills.
4.2.1 Absolute and relative poverty 4.2.2 Inequality 4.3.1 Measures of development 4.3.2 Factors influencing growth and development 4.3.3 Strategies influencing growth and development
Indicators used to look at the extent to which countries have improved their economic wellbeing and quality of life
An increase in the value of real output in an economy over time
The process of improving economic well-being and quality of life
When an individual cannot afford the basic needs of life in the country in which they live
When individuals or households are poor in comparison to the rest of the population
This occurs when there is a disparity in the stock of financial assets e.g. houses owned by individuals or households
This occurs when there is a disparity in the flow of earnings of individuals or households
Understanding the difference between developed and developing economies and how poverty can occur between different types of economies.
Help student recognise issues in the economy and to have differing view and accept that other will challenge their views.
New Description
The market for interest-bearing securities (with either a fixed or a floating rate) and with a maturity of at least one year) that companies and governments issue to raise capital.
Bank capital is the value of the bank's assets minus its liabilities (or debts).
Money and liquid assets (such as securities that can be sold quickly) held by banks in order to meet cash withdrawals by customers.
An arrangement with a bank for a loan, or bank lending in general.
Market for medium-longer term loan finance. Capital markets are the markets where securities such as shares, and bonds are issued to raise medium to long-term financing. Includes raising of finance by the government through the issue/sale of medium-term and long-term government bonds for example 10 year and 20 year bonds (loans).
Commercial banks have a licence to take the deposits of savers and make loans. They provide services to corporate and individual customers. Commercial banks make their profits by taking small, short-term, relatively liquid deposits from retail savers and transforming these into larger, longer maturity loans e.g. in the form of business loans and mortgages. Other services of commercial banks include providing debit and credit cards, private banking, money custody and guarantees, cash management and settlement e.g. through cheque accounts, as well as trade finance.
Crowdfunding is a form of equity finance that has grown rapidly in the USA and the UK. Crowdfunding involves the collective effort of a large number of individuals who network and pool small amounts of their capital to finance a new or existing business venture. Social causes remain the most active source of crowdfunding activity.
An investment bank provides a wide range of specialized services for companies and large investors. These include: Underwriting and advising on securities issues and other forms of capital raising; Advice on mergers and acquisitions and also corporate restructuring; Trading on capital markets; Research and private equity investments.
The money supply is the total amount of money in circulation in a country or group of countries in a monetary union. A distinction is made between narrow & broad money.
A sustained rise in the prices of assets such as housing and equities which takes their values well above long run sustainable levels.
The FPC’s main role in the UK is to identify, monitor, and take action to remove or reduce risks that threaten the resilience of the UK financial system as a whole. The FPC publishes a Financial Stability Report identifying key threats to the stability of the UK financial system. The FPC has the power to instruct commercial banks to change their capital reserves (buffers).
The Financial Conduct Authority (FCA) is funded entirely by the firms it regulates. The FCA has three main objectives: (i) Secure an appropriate degree of protection for consumers; (ii) Protect and enhance the integrity of the UK financial system; (iii) Promote effective competition in the interests of consumers.
A liquidity trap occurs when low interest rates and a high amount of cash balances in the economy fail to stimulate aggregate demand partly through a lack of confidence.
Illegally and unfairly controlling the price or the interest rate in order to increase their joint profits or exploit consumers.
Moral hazard exists in a market where an individual or organisation takes many more risks than they should do because they know that they are either covered by insurance, or that the government will protect them from any damage incurred as a result of those risks.
The monetary authority and major regulatory bank in a country. Its functions include issuing and managing the country's currency and a lender of last resort to the banks.
When a central bank enters the foreign exchange market to buy or sell currency in order to influence exchange rates.
New Description
When an increase in government spending/investment leads to an expansion of economic activity (real GDP) which in turn incentivises private sector firms to raise their own levels of capital investment and employment.
The crowding out view is that a rapid growth of government spending leads to a transfer of scarce productive resources from the private sector to the public sector where productivity might be lower. Can also lead to higher taxes and interest rates which squeezes profits, investment employment in the private sector.
How the final burden of a tax is shared out. If demand for a good is price elastic and a tax is imposed, then the tax may fall mainly on the producer as they will be unable to put prices up without losing a lot of demand.
A (supposed) relationship between economic activity and the rate of taxation which suggests there is an optimum tax rate which maximises total tax revenue.
With a progressive tax, the marginal rate of tax rises as income rises. I.e. as people earn more income, the rate of tax on each extra pound goes up. This causes a rise in the average rate of tax.
With a regressive tax, the rate of tax paid falls as incomes rise – I.e. the average rate of tax is lower for people on higher incomes. Examples: Duties on tobacco and alcohol.
When the marginal rate of tax is constant leading to a constant average rate of tax.
A feature of the tax and transfer system that reduce economic activity during booms and stimulates activity during slumps, but without direct intervention by the government.
An unexpected event beyond the control of the country’s officials that has a large negative impact on its economy.
These occur in the global financial system, such as increased stress in the international banking system or financial markets.
Revision for theme 1,2,3 and 4.
Test all assessment objectives in all four themes.
Mentoring and helping each other to achieve the best possible grade in the final examination.