Financial
Managerial
Technical
Purchasing
Marketing
It is the benefits or drawbacks experienced by a third party as a result of economic activity
the process wherein a company or individual decides to focus their labor on a specific type of production
A market dominated by a small number of firms
Land - Rent
Labour - Wages
Capital - Interest
Enterprise - Profit
the basic economic problem is that individuals have unlimited wants yet have limited resources to satisfy such wants. Producers have to choose where to allocate their resources
Provides a setting in which buyers and sellers interact to exchange goods, services, or resources
The features of a market that affect the behaviour and performance of firms
This is when a market fails to allocate their resources efficiently failing to take inot account all the costs and benefits associated with economic activity.
Public goods - Allows consumers to make use of a good withoutt paying for it therefore firms dont make a profit
Positive and negative externalitites - Can have an impact on a third party, but not included in the cost of economic activity
Overconsumption of demerit goods - These are bad for society and are over consumed meanwhile merit goods are beneficial for society are under consumed
Monopolies - Have the power to restrict their ouput and raising their price under-providing goods to the market
Increase the supply of merit goods to counter the overconsumption of demerit goods
Increase or maximise positive externalities
Subsidies - money paid by the government or a private sector to a firm to increase the supply of a merit good in a market
State provision of goods and services - When the government or state intervenes in market in order to supply a good or a service.
The extent to which supply changes due to a change in price
Availability of producer subsitutes - The number and closeness of producer subsitutes will help determine PES. If it is easy for firms to change its production of its products (e.g like from table to chairs) then the good would be more price elastic
Spare capacity - If there is a shift to the right of the demand for a good it is easy to increase production for a firm that has a large spare capacity
Length of production period - Goods that are produced in a short amount of time tend to be less inelastic and respond to a change in price easier
- High unemployment is genrally an indicator of poor economic
performance
- It presents a waste of resources
- Economies with strong economic growth are likely to have low unemployment
- Higer demand
- Higher government tax revenue
- reduced poverty
- Improves standard of living
- Lower spending on welfare
When the averga eprices change at a slow and steady rate which is measured by the rate of inflation.
Inflation is meausred by the CPI (Consumer Price Index).
Inflation is important as it affects the value of the pound in your pocket
- Measures the rate of change in a countries output
- the key measure is GDP which calculates the sum of a countrys outpout over a year
- This is a crucial goal in macro economics
- Job creation
- Rising incomes
- Improves standard of living
- Imporves international competetitiveness
- Improves confidence for consumers to spend and businesses to invest
It measures the UKs record of economic activity with other countries
- If Exports > imports = surplus
- If Imports > Exports + defecit
Surplus or equilibrium is useally the desired objective
- They have an BoP current account defecit on the trade of goods but is offset by a BoP current account surplus in the trade of services
- High imports allow for a wider range of consumer choice often leading to lower prices
- Firms benefit from cheaper higher quality which reduce costs for them and can reduce it for consumers
Lower taxation:
- Consumers keep a higher proportion of their income
- They have higher disposable income
- Consumers demand more increasing total aggregate demand (Consumption is 70% of it)
- Firms have higher profit leading to them investing
- Achieve economic growth and increasing productivity
Monetary policy:
- Lower interest rates
- Less incentive to save, More incentive to borrow and spend
- Increase consumption, increasing aggregate demand
- More VAT is paid, More Cooperation tax is paid
- increase government revenue and investment spending
- Improves the qualifications and skills of future workers
- Increases the supply of the labour force
- Firms see more higher skilled workers being supplied
- Demand for these workers will increase
- Unemployment reduces
- More tax will be paid as more people are working a job
- More gov revenue and expenditure on investments
Increase/decrease taxes to cause a rise or a fall in AD
reduce inflationary pressures or increase it
Demand pull inflation will/will not occur
Prices remain stable
decrease interest rates to see more borrowing, more consumption and AD increases and so does inflationary pressure
Increase interest rates to see lest borrowing, less consumption, reduction in infationary pressures
- Increased spending in education and training will lead to a higher supply of the labour force
- More supply of skilled workers will cause firms to lower their prices
- This is because the firm becomes more productive and and efficient. This can reduce the cost per unit and achieve economies of scale
- raising income tax
- reduces the high demand in the uk for exports
- decreases the high ratio of imports: exports
- can reduce defecit or reach a balance of trade
- Invest into the supply side policies
- Increase firms productivity in the Uk which can give rise to more exports due to greater ouput
- Can imporve price competitveness
- Depreciation of exchange rates through lower interest rates
- Make exports cheaper and therefore globally more price competitive
This is hwere the average cost of production or unit cost of production falls as the scale of production rises because fixed costs are spread over more units
Managerial
Financial
Risk-Bearing
Technical
Purchasing
A larger firms can employ the best workers in their fields. These experts can reduce costs and increase revenue.
When a firm buys a large amount of products from a supplier (Buying in bulk) They are able to recieve a discounted price.
Larger firms tend to be less risky. They already have an established customer base and are likely to have assets that can be sold to pay off debt. Therefore, they can access cheaper sources of finance as they are less of a risk
Firms can invest in new technology or development to make their production efficient.
They can spread their risk as larger firms can afford to make a mistake in one firm as they can afford to operate in another
Internal factors - Where expansion occurs from within the business such as opeining new stores or launching new products
External factors - expansion occurs form outside a busniness such us buying out a customer or bakruptancy of another business
franchising
E-commerce
Outsourcing
Opening new stores
When a business (the franchisor) gives the another person or business (the franchisee) the right to trade or sell its product. The franchisee usually pays a licensed fee
Online shops ease of access to the global market
They can keep up the the social trends and they can keep trading 24/7
Using a 3rd party to carry out some functions of a business. Such as owning a factory manufacture to increase the amount of good supplied
A good that has a greater negavtive social impact/ cost than private cost
A good that has a larger private cost and a smaller social cost
Costs of consuming a good or service that has been paid for by those that use them
Costs of consuming a good or service that have been paid for by society