Economics: Labour Market and Firms

Vocabulary practice flashcards covering the concepts of labour, the labour force, labour efficiency and mobility, as well as the nature, growth, integration, and economies of scale of business firms.

Labour

All human physical and mental efforts used in the production of goods and services to satisfy human wants.

Labour Force

The total number of people who are employed or unemployed but are available for and actively seeking work within an economy.

Employed Persons

People who are currently engaged in paid employment or self-employment.

Unemployed Persons

People who do not have jobs but are available for work and actively seeking employment.

Efficiency of Labour

The ability of a worker to produce a large quantity of goods or services of good quality within a given period, producing more output with less waste of time, effort, and resources.

Mobility of Labour

The ability and willingness of workers to move from one job, occupation, or geographical location to another in search of better employment opportunities.

Occupational Mobility of Labour

The ability of a worker to move from one occupation or type of job to another.

Geographical Mobility of Labour

The ability of a worker to move from one geographical location to another in search of employment, either within the same country or between different countries.

Firm

A business organisation that combines factors of production such as land, labour, capital, and entrepreneurship to produce goods and services for sale.

Growth of Firms

The increase in the size, scale, output, sales, capital, market share, number of employees, or assets of a business over time.

Internal Growth

that occurs when a firm expands its operations using its own resources.

External Growth

Growth that occurs when a firm expands by joining with, merging with, or taking over another business.

Merger

An event that occurs when two or more firms voluntarily combine to form one business.

Takeover

An event that occurs when one firm obtains control of another firm by acquiring a controlling interest in it.

Horizontal Integration

A combination that occurs when firms operating at the same stage of production and in the same industry combine.

Vertical Integration

A combination that occurs when a firm combines with another firm at a different stage of production.

Backward Integration

A form of vertical integration where a firm takes control of its supplier.

Forward Integration

A form of vertical integration where a firm takes control of a distributor or retailer.

Conglomerate Integration

A form of diversification that occurs when firms in unrelated industries combine.

Economies of Scale

The advantages or reductions in average cost that a firm enjoys when it increases its scale of production such that average cost per unit falls as output increases.

Internal Economies of Scale

Cost advantages enjoyed by a particular firm as it increases its own scale of production.

Technical Economies

A type of internal economy of scale where large firms use specialised machinery and advanced technology to reduce the cost per unit.

Purchasing Economies

A type of internal economy of scale where large firms buy raw materials in bulk and obtain discounts.

Managerial Economies

A type of internal economy of scale where a large firm employs specialised managers for different departments such as finance, marketing, and production.

Financial Economies

A type of internal economy of scale where large firms have easier access to loans and obtain funds at favourable interest rates.

Marketing Economies

A type of internal economy of scale where the cost of advertising can be spread over a large volume of output.

Risk-Bearing Economies

A type of internal economy of scale where large firms diversify their products and markets, reducing dependence on one product or market.

Research and Development Economies

A type of internal economy of scale where large firms employ researchers and invest in research and development to improve production.

External Economies of Scale

Benefits enjoyed by firms in an industry as the industry itself expands.

Diseconomies of Scale

A situation that occurs when a firm becomes so large that its average cost of production begins to rise as output increases.