2.6 production Flashcards
what is the role of producers
makes and supplies goods and services by combining the factor of production
what is production
the total amount of goods and services produced by a firm or industry in a given amount of time
what is productivity
a measure of efficiency measured in terms of output per unit of input
what is the equation for productivity
total output / total input
what does productivity rely on
investment in the production process
workforce education and training
better quality raw materials
what is a diseconomy of scale
cost of production increasing as the firm grows in size due to disadvantages of growing
how can producers increase productivity
workers specialising in part of the production process
investment in new tech
improving skills in workforce
why is high productivity important
lower average cost and increasing economies of scale
greater profits
increased total output
greater export thus more economic growth
what is total cost and the equation
the cost of actually producing an item
total cost = total fixed cost + total variable costs
what is average cost and the equation
the cost of producing a single unit
total fixed cost / quantity
what is total revenue and the equation
total income from sale
price x quantity
what is an economy of scale
occur when mass producing a good results in lower average cost.
what are external economies of scale
improvement in transport links
location
concentration of firms (suppliers)
what are internal economies of scale
division of labour
financial economies
marketing economies
risk-bearing economies
