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26 Cards in this Set
- Front
- Back
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Production |
Converts inputs or factor services into outputs of goods services |
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Short-run production |
Occurs when a firm adds variable factors of production to fixed factors of production |
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Long-run production |
Occurs when a firm changes the scale of all the factors of production. |
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Productivity |
Output per unit of input |
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Labour Productivity |
Output per worker
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Capital productivity |
Output per unit of capital
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Productivity gap |
The difference between labour productivity in the UK and in other developed economies |
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Specialisation |
A worker only performing one task or a narrow range of tasks |
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Division of labour |
This concept goes hand in hand with specialisation. Different workers perform different tasks in the course of producing a good or service. |
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Trade |
The buying and selling of goods and services
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Exchange |
To give something in return for something else recieved |
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Short run |
The time period in which at least one factor of production is fixed and cannot be varied |
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Long run |
The time period in which no factors of production are fixed and in which all the factors of production can be varied. |
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Fixed cost |
Cost of production which, in the short run, does not change with output |
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Variable cost |
Cost of production which changes with the amount that is produced, even in the short run |
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Total cost |
Fixed cost + Variable cost |
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Average cost |
Total cost of production divided by output |
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Long-run average cost |
Long-run total cost divided by output |
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Economy of scale |
As output increases, long-run average cost falls |
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Diseconomy of scale |
As output increases, long-run average cost rises |
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Technical economy of scale |
Cost saving generated through changes to the 'productive process' as the scale of production and the level of output increase. |
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Internal economy of scale |
Cost saving resulting from the growth of the firm itself |
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External economy of scale |
Cost saving resulting from the growth of the industry or market |
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Total revenue |
All the money received by a firm from selling its total output |
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Average revenue |
Total revenue divided by output |
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Profit |
Total sales revenue minus total costs of production |
