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1911625
Unit 1 - Markets & Market Failure
Descripción
AS Economics Mapa Mental sobre Unit 1 - Markets & Market Failure, creado por Ben Cooke el 25/01/2015.
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Resumen del Recurso
Unit 1 - Markets & Market Failure
Economic Activity
Factors of Production
CELL
Needs/Wants
The basic economic problem
Scarcity
Opportunity Costs
Objectives
Individual
Max gains from working
Max purchasing power
Firms
Profit
Growth
Economic Systems
Planned
Mixed
Market
Statements
Positive
Facts
Can be tested
Normative
Opinions
Demand & Supply
Demand
Shifts
Price of other goods
Substitutes
Compliments
Compliments
Joint Demand
Change in consumer income
Normal goods
Inferior Goods
Fashion
Disposable income
Interest Rates
Legislation
Population
Exceptions
Ostentatious Consumption
Luxury items
Speculative Demand
Giffen Goods
Highly inferior goods
relationship between buyers and suppliers
Types
Latent
Potential
Derived
Demand for X is linked to Y
Composite
More than one use
Effective
Supported by ability & willingness
Supply
The quantity of goods sellers are willing to sell at a given price
Types
Actual
Planned
Joint
Production of X leads to production of Y
Cattle > Beef & Leather
Competing
Production of X is linked to production of Y
Wheat/Biofuel
Shifts
Increase in costs (CELL)
Legislation
Technology
Productivity
Subsidies
Tax
Ad Valorem
VAT
% tax
Unit tax
per unit
Markets
Equilibrium
Demand = Supply
Excess Demand
Supply < Demand
Price above equilibrium
Excess Supply
Supply > Demand
Price below equilibrium
Competitive
Large numbers of buyers/suppliers
Functions of price
Signalling
Information
Incentive
Rationing
Allocation
Specialisation
Benefits
^productivity
^output
Lower Costs
More competitive
Growth
Limitations
Workers alienated
Regions may suffer if that industry declines
Production costs
Fixed
Rent
Salaries
Insurance
Variable
Raw materials
Labour
Economies of scale
As output rises costs decrease
Then rise (dis-economies of scale)
Internal
Management
Purchasing
Financial
Technical
Marketing
Risk bearing
External
Skilled labour pool
development which benefits all firms
Dis-economies of scale
Alienation of staff
Loss of communication
Management issues
Elasticity
Supply
Types
PES
(%ΔQS)/(%Δ£)
Demand
Factors
Price
Price of other goods
Income changes
Type of good
Types
PED
(%ΔQD) / (%Δ£)
XPED
(%ΔQD of A) / (%Δ£ of B)
Substitutes & Compliments
YED
(%ΔQD)/(%ΔY)
Neccessities & Inferior Goods
PED>1
Elastic
PED>∞
Perfectly Elastic
PED=1
Unitary Elastic
PED<1
Inelastic
PED=0
Perfectly Inelastic
Revenue
Inelastic
^£ = ^Revenue
Elastic
\/£ = ^Revenue
Market Failure
Types
Complete
No supply
Partial
Wrong quantity supplied
Public Goods
Non-excludability
Non-rivalry
Free rider problem
eg. Lighthouses
Quasi public goods
eg. Toll roads
It may be possible to exclude
Merit Goods
Goods that would be under-consumed (from desirable levels)
eg. Vaccinations
Demerit goods
Goods that are over-consumed causing negative externalities
eg. Alcohol
Monopolies
Pure
No incentive to improve
Prices may be artificially high
High profits
Benefits/Costs
Economies of scale
R&D
Price setters
Barriers to entry
Price > marginal loss
Externalities
Consumption
Negative
MPB > MSB
Tax applied lowers MSC meaning MSB=MSC @ MSB Q
Positive
MSB > MPB
Subsidy raises MSC meaning MSB is demanded
Production
Positive
MPC > MSC
Subsidy to raise MPC to MSC
Negative
MSC > MPC
Taxation to reduce MPC to MSC
Government Intervention
Pure public goods
Closing the intervention gap
Dealing with negative externalities
Regulation
Taxation
Pollution permits
Price controls
Price controls
Price floors
Price ceilings
Buffer Stocks
Government Failure
Causes
Inadequate Information
Conflicting Objectives
Administration costs
Market Distortions
Recursos multimedia adjuntos
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703d27f4-1f02-479b-aec3-81fdac511050 (image/png)
b0de831a-aaae-4686-9c19-13c0ea80b6e4.gif (image/gif)
ecbbe2a6-30a5-4c52-8cd7-e3bb245a77f6 (image/png)
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e36a78bd-80f9-44a3-8caa-24d5c9415530 (image/png)
dee154eb-a55d-4520-a1e0-52d453756ea1 (image/png)
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