3:Production,costs and revenue Flashcards
Productivity
Output per unit of input
Labour productivity
Output per worker
Capital productivity
Output per unit of capital
Productivity gap
The difference between labour productivity in the UK and in other developed economies
Specialisation
A worker only performing one task or a narrow range of tasks. Also, different firms specialising in producing different goods or services
Division of labour
Different workers perform different tasks in the course of producing a good/service
Trade
The buying and selling of goods/services
Exchange
To give something in return for something received. Money is a medium of change
Short run
The time period in which at least one factor of production is fixed and can’t be varied
Long run
Time period in which no factors of production are fixed and they can be varied
Fixed cost
Cost of production which, in the short run, doesn’t change with output
Variable cost
Cost of production which changes with the amount that is produced, even in the short run
Total cost
The whole cost (fixed cost+variable cost) of producing a particular level of output
Average cost
Total cost of production divided by output
Long-run average cost
Long-run total cost divided by output
