Unemployment:
- Refers to unused capacity of and factor of production (land labour capital and enterprise)
Unemployment rate;
- Refers to the % of the labour force (15+) that is actively looking for a job but is with out one.
Types of unemployment:
Frictional- workers temporarily out of employment as a result of changing from one to another
Seasonal – workers who are temporarily out of employment due to the seasonal nature of some production (eg. Fruit picking) or regular events occurring in the economy. (Eg. School leavers entering the work force)
Cyclical- workers who lose their jobs due to insufficient aggregate demand (C + I + G + X –M) for Australian produced goods and services.
C= consumer goods and services, I= investment, G= government X= exports, M= imports
Hardcore – workers who have difficulty in holding down a job due to certain personal characteristics such as chronic illness, poor attitude, lack of training or experience
Structural- workers who have lost their jobs due to changes in the various industries, that makes up the production sector of the economy.
Economics of industry
Production
- The process of combining land, labour, capital, and enterprise to provide goods and services in an economy
Utility
- The ability of goods and services to satisfy wants.
Exchange
- The process of trading things of equivalent value.
Factors of production
- Land
- Labour
- Capital
- Enterprise
Labour mobility (occupational/geographical): The willingness and ability of a nations labour force to change jobs and or location of employment.
Disguised unemployment (under-employment): Those who want to work more hours or get full time rather than part time work.
Trade union: An association or organization of wage earners or employees, which exists for the purpose of improving member’s pay and conditions of employment.
E.g. nurses union.
Employers association: An association or organization of employers, which exists to represent employers in negotiations with employees and governments.
Industrial tribunal: A body that has been established to deal with industrial disputes through conciliation or arbitration.
Collective bargaining: Negations between firms of the same area to determine wage levels and conditions of employment.
Conciliation: A process, which involves a third party assisting disputing parties to reach an agreement.
Arbitration: A process in which a third party makes a judgment to resolve a dispute and which the disputing parties must abide by.
Enterprise bargaining: Negotiations, which occur at the firm level between employees and employers to determine wage level and conditions of employment.
Log of claims: When a party goes to arbitration demands and claims against another organization must be documented in a log of claims.
Award: Decided by industrial relations commission, which lists minimum wage and working conditions.
ACTU: is the biennial congress, which is attended by about 800 delegates form affiliated organizations. Special meetings of congress are held whenever the executive considers them advisable, subject to the approval of the majority of branches, or by resolution supported by unions representing one third of the total membership of the ACTU.
ACCI: Australian Chamber of Commerce and Industry. The largest organization in Australia representing employers, industry and commerce in their negotiations with employees and governments.
AIRC: Is the key federal industry tribunal with administers the award safety net system and conducts the annual safety net wage.
Demarcation: The reservation of particular tasks to workers with specialized skills some degree needed for health and safety.
E.g. Gas pipes changed by a qualified engineer.
Strike: Withdrawal of labour by a group of employees, normally members of a trade union, official strike is one called or recognized by union, unofficial strike is one not called by a union.
Work-to-rule: Work to rule refers to a company’s employees only doing “what the rules state they must do”.
E.g. no overtime will be done.
Boycott: A refusal to trade with the person, company or country boycotted. May involve refusal to buy goods and services form somebody or to sell them.
Lockout: A form of industrial action by employers, in which workers are excluded from their place of work and their play, but not dismissed.
Stand down order: An order given to employees by trade unions to stand down from work, until demands are met.
Shop steward: A worker elected at shop floor level to represent fellow-workers in discussions with management not trade union, through they are normally members.
Award wage: Normal wage that is given to the employee as a result of their education status.
Wage indexation: Relates to a price index. Measures of price and wages compared to the previous.
Worker participation: Participation by workers in the process of decision taking in a firm. One extreme is where the workers elect directors.
Work sharing: Rotation and separation of duties of specialization.
Piece wage: Wages are given out to workers in accordance to how many ‘pieces’ or units of production that are produced.
Real wage: The purchase power of the money wage received by an employee.
Money wage: The actual wage, in dollar terms, received by an employee.
Youth wage: The proposal to pay teenagers a lesser amount in order stimulates employment opportunities.
Workforce actualization: Another labour market phenomenon that became significant during the 1990’s was the trend for many employers to take on casual labour rather than full-time employees.
Distributive justice: One problem area with regards to age determination is the notion of an equitable share of the nations income or GDP. In other words, how much should go to wage and salary earners, how much should go to companies as profit, and how much to other forms of income?
Workplace reform: The impact of technology brought a realization that the production methods of previous decades could no longer be sustained if our industries were to remain competitive. Employer’s trade unions and governments acknowledged the need for change.
Certified agreements:
Australian workplace agreements: Is a negotiated agreement between a group of employees and their employer, which may involve some variations to the set award conditions.
Safety net: A system of available payments in cash or in kind which keep people incomes form falling below some socially accepted minimum level.
Employment advocate: Who applies a no-disadvantage test to ensure that neither party to the agreement is to be adversely affected by the proposed agreement.
Production: The process of combining land, labour, capital and enterprise to provide goods and services into the economy.
Factors of production: The broad categories under which a nation’s resources that go into creating goods and services to satisfy human wants can be classified.
E.g. land, labour, capital, enterprise.
Labour-intensive production: Process using a high proportion of capital relative to labour input.
Market: A place or situation where buyers and sellers interact for purpose of trade or exchange.
Law of diminishing marginal productivity: States that at a certain point of diminishing returns occurs. This states that for every extra unit of production used, you will not receive the extra output (due to labour cost, crowding effect).
Factor specialization: An economy becomes more advanced they tend to specialize their of the factor in the production process.
Fixed costs: Those costs which a firm must meet weather or not any production occurs.
Variable costs: The cost incurred by a firm whenever production occurs.
Total cost: The value of inputs needed to produce nay good or service. Measured in units, usually money.
Average cost: Calculated by dividing total costs (fixed costs, variable costs) by the number of units of output.
Marginal cost: The cost of producing one additional unit of output.
Economics of scale: In the long run production period the firm can avoid the onset of diminishing returns by varying any or all of the factors of production. This includes the scale of plant it is using to produce output.
E.g. firms may expand the size of a farm, factory, shop, office or mine complex.
Diseconomies of scale: A tendency for making an operation larger to decrease its average efficiency.
Internal economics of scale: Refers to cost saving or advantages that accrue to the firm because it becomes more efficient in allowing its internal resources. Internal economics of scale results form cost savings within the firm’s direct span of control.
External economics of scale: Result form reductions in average cost due to factors out side the firm’s direct control. This is largely the result of growth of the industry in which the firm operates casing a reduction in the long run average cost curve faced by firms in the industry.
Internal diseconomies of scale: Refers to rises in production costs per unit as output increases. Increases in plant sizes beyond technological optimum will lead to rising average costs as the fixed factor.
E.g. land, labours, or capital, are incapable of yielding further reductions in costs.
External diseconomies of scale: Results from reductions in average costs due to factors outside the firm’s direct control. This is largely the result of growth of he industry in which the firm’s operations casing a reduction in the long run average cost curved faced by fir in the industry.
Mechanization: The act of replacing human labour with capital. However, the capital machinery is still run by man.
Automation: The act of replacing the labour that runs a machine, with a computer.
E.g. Drill press.
Localization of industry: The tending of firms in the same industry or related industry to locate in close proximity to each other.
Factor mobility: Refers to the ease to which each of the factors of production can be moved form one use to another in response to change in market prices (demand/supply conditions).
Occupational mobility: Ability for the labour force to be able to change from one job to another.
Geographical mobility (labour): Move from one geographic location to another.
Capital accumulation: The ability of an economy to increase its stock of capital.
Marginal product: The extra output produced by the one extra unit of the variable factor, labour.
Productivity: Refers to the volume of output produced in terms of the volume of inputs used to produce the outputs. Total factor or multifactor productivity refers to the productivity of the all of the factors of production contributed to produce a given volume of output.
Primary production: Includes all industries involved in cultivation of land, grazing of animals and extraction of raw materials from land or sea.
Secondary (manufacturing) production: Includes all industries involved in processing raw materials and producing goods.
Tertiary (service) production: Includes all industries involved in the production of services rather than goods.
Industry: A collection of firms, which produce the same type of product or service.
Firm: The basic unit of organized production, in its smallest form, can consist of an individual know as a sole trader or, in its largest form a multi corporation with employs thousands of people.
Incorporated business: Number of owner’s management. Start up capital types of shares transfer of shares voting rights liability expansion. Advantages, disadvantages examples legal status.
Unincorporated business: Number of owners management start up capital liabilities expansion advantage, disadvantage example legal status.
Sole trader: Is the simplest and most common type of firm and exists in areas of production, where capital requirements are low and personalized services are essential.
E.g. shop keeper, dentist.
Partnership: Is usually the next stage of progression. If an entrepreneur wishes to expand his or her business but does not have sufficient financial resources, a partnership a maybe formed.
Private company: Identified by PTY LTD, can have between two and fifty shareholders. The public cannot be invited to buy shares in such a company, although individual’s shareholders may transfer there with the approval of the company directors.
Public company: They can be identified as LTD. Any five or more people may apply for incorporation as a public company and then invite the public to invest in shares.
Holding company: Is one, which acquires sufficient shares to give it control over public company, which becomes its subsidiary. The important point to note here is that the holding company allows its subsidiary to operate under its existing name.
Perfect competition: The market situation in which a large number of buyers and sellers exchange identical products.
Monopoly: The market situation in which one seller sells a product far which there is no close substitute.
Monophony: Market situation with only one buyer. Unless supply is perfect elastic a monopolist has an incentive to exploit the fast that reduction in the quantity bought will reduce the price.
Duopoly: A market situation with two sellers each of whom most must take account of the other expected reactions.
Oligopoly: The market situation in which a small number of firms are selling similar but no identical products.
Monopolistic competition: The market situation in which a large number of buyers and sellers are exchanging similar but not identical products.
Australian stock exchange (ASX): A national organization, which operates a share market for the trading of shares and other securities.
Debenture: Loan to a company at a fixed interest rate for a specific period, rather than a part ownership of a company.
Dividend: Payment made by a firm to its shareholders for providing capital, a distribution of a firm’s profits to shareholders.
Equity: Another name for shares, ownership of a firm. (Important)
Interest rate: The price paid for the use of capital, usually expressed as an annual percentage of he value of the capital.
Bonds: Like debentures but the loans are to a government or semi-government authority at a fixed rate of interest for a specific period of time.
Bonuses: Free shares issued to existing shareholders, in ratio to the number of shares already held.
Fast system: (flexible accelerated Securities Transfers Systems) Provides shareholders with the option of receiving a statement of shareholdings instead of a share certificate.
Listing rules: Rules designed to establish stringent standards for companies wishing to be listed on the Australian stock exchange (ASX).
Options: An agreement by which a company offers to issue shares at a set price at a later date in order to raise additional capital.
Par value: The face value of a share when it is initially issued in the primary market.
Primary Market: The new-issue market where companies are first floated and stockbrokers on behalf of the company sell shares.
Prospectus: A document provided by a company before a new share issue so that investors may make an informed decision.
Public listed company: A company, which has agreed to abide by, the stock exchange rules so that its shares can be bought and sold on the stock market.
Rights: New shares offered to share holders in the same company, usually at lower those market prices.
Seats: (Stock exchange Automated Trading System). The computer system used for trading shares in companies listed by the Australian Stock Exchange (ASX).
Secondary market: The markets in which shares are bought and sold by stockbrokers on the behalf of investors.
Share register: An official record of shareholders details.
E.g. the number of shares held, name, address, which is required of each public company by the Australian Stock Exchange (ASX).
Stockbroker: A member or agent of the Australian Stock Exchange (ASX) who is authorized to buy and sell securities for investors in the stock market.
All ordinaries index: Measure of the level of share prices at any given time to determine the overall performance of the share market.
Blue chip shares: Shares of a company known for its ability to make profits in good and or bad times.
Capital gain: Profit from an increase in the capital value of assets.
Dividend imputation: A tax rule that enables share holders to claim tax credit for the tax that a company has already paid on its profits.
Dividend yield: The sum total of dividends paid by a company during the financial year dividend by the number of share issued.
Earnings per share: A companies’ net profit divided by the total number of shares in the company.
Fully franked dividends: Dividends on which full company tax has been paid by a company and for which investors is entitled to an imputation credit on the full amount.
Portfolios: investor’s holdings of a range of assets (property, bonds, shares etc).
Price/earnings ratio: A companies share price dividend by its earning per share.
Bid: Price at which an investor is prepared to buy shares.
Brokerage: The fee charged by a stockbroker for services in buying and selling shares.
Chess: (Clearing, House, Electronic, Sub register, System). The stock exchange system to computerize the transfers and settlement producers for Australian Stock Exchange (ASX) transactions
Globalization: Is the spread of the phase of production activity to various internal locations with overall locations with overall co-ordinations by a single firm or a network of forms. E.g. as is required to produce a ‘world car’.
