Edexcel Economics 6. Business Behaviour

Description

Term

That which often arises where firms within a particular industry are concentrated within one geographic area such as horse racing in Newmarket, Suffolk

Economies of scale that arise from the expansion of an industry in which firms are operating

That which consists of firms in an industry and the firms and individuals who purchase the product

That which happens to average fixed costs (AFC) as output increases due to the same cost being dividing between a higher number of units

A merger between firms or acquisition of one firm by another that is operating in a different market

The rule that profits are maximised when marginal cost is equal to marginal revenue

Those firms concerned with manufacture

Where a firm purchases another firm

One of the first steps taken after a merger or acquisition where unnecessary 'duplicates' of staff, shops, &c. are made redundant or closed

That which all costs are when output is zero

Description

Term

That which affects a business's objectives in that if it has just been established it may seek just to break even, whereas if it is more well established it may look to achieve profit and expansion

That which often arises from inefficiencies and complexities in managing and administering large firms, such as due to a result of the principal-agent problem

When an increase in a firm's scale of production leads to production at higher long-run average costs, being either internal or external

A company with statutory minimum capital, the shares of which are publicly tradable subject to limited liability

That which firms may seek to achieve by reducing prices to stimulate demand or increasing prices while maintaining sales

That which firms might do so as to ensure control over the supply of and price of materials

Internal economies of scale resulting from large firms having more scope for division of labour

That which a firm makes when average revenue equals average cost

Where firms reduce average costs by producing a wider range of products which can be managed by existing administrative structures

A merger between firms or acquisition of one firm by another within the same industry and stage of production