3.1.4

Question 1

What are average costs?

Answer 1

The cost of producing one thing. Total cost divided by quantity.

Question 2

What are average fixed costs?

Answer 2

The fall significantly when output increases.

Question 3

What is average revenue?

Answer 3

Total revenue/number of products or services sold

Question 4

What are average variable costs?

Answer 4

Initially downward sloping as increasing returns to labour and economies of scale are achieved with increased output and then they rise with output.

Question 5

What is break-even point?

Answer 5

Total revenue=total cost

Question 6

What are business objectives?

Answer 6

Specific and measurable targets set in order to meet the aims of the business.

Question 7

What is cash?

Answer 7

Notes, coins and debit cards.

Question 8

What are costs?

Answer 8

The costs experienced in running a business.

Question 9

What are fixed costs?

Answer 9

Costs that have to be paid regardless of level production.

Question 10

What is a marginal cost?

Answer 10

The additional cost of producing an extra unit.

Question 11

What is profit?

Answer 11

Revenue-costs

Question 12

What is revenue?

Answer 12

Amount of income received by the business over a given period of time.

Question 13

What are total costs?

Answer 13

Fixed costs+total variable costs

Question 14

What are variable costs?

Answer 14

Costs that are dependent on the level of production.

Question 15

What are assembly plants?

Answer 15

Factories.

Question 16

What is bureaucracy?

Answer 16

Paperwork that clogs up the operations of departments.

Question 17

What is deindustrialisation?

Answer 17

Decline in manufacturing the UK went through in the 80s and moved to the tertiary sector.

Question 18

What is production?

Answer 18

The transformation of inputs into goods or services, the total output of goods/services over a period of time.

Question 19

What is productivity?

Answer 19

Measure of output per unit of input.

Question 20

What is diseconomies of scale?

Answer 20

When an increase in the sale of production results in increased average cost e.g. overtime pay

Question 21

What are economies of scale?

Answer 21

When increases in production lead to reduced total average costs.

Question 21

What are financial economies of scale?

Answer 21

Gaining access to better rates and financial specialists.

Question 21

What are external economies of scale?

Answer 21

Benefits a firm receives from a grow in the industry.

Question 21

What are marketing economies of scale?

Answer 21

Large marketing expenses can be spread over a larger amount of products/services.

Question 21

What are internal economies of scale?

Answer 21

Benefits a firm receives from a growth in size.

Question 21

What are purchasing economies of scale?

Answer 21

Bulk buying brings down external costs.

Question 22

What are managerial economies of scale?

Answer 22

A firm can attract the best staff into the company.

Question 22

What are risk bearing economies of scale?

Answer 22

Ability of firms to spread its risk over a large number of areas.

Question 22

What are technical economies of scale?

Answer 22

Can afford the most efficient machinery or capital equipment. Increased dimensions of containers, principle of multiples when using the same machine twice.

Question 22

How is revenue generated?

Answer 22

Through trading or through loans or sale of assets.

Question 22

What are 2 examples of fixed and variable costs?

Answer 22

Fixed: Rent and rates for premises and wages and salaries not linked to output Variable: Raw materials, other bought in supplies

Question 23

Who are producers?

Answer 23

They may be individuals, businesses or the government.

Question 23

What are the benefits of productivity?

Answer 23

Employment, increased profits, increased economies of scale, increased market share.

Question 24

What are the costs of productivity?

Answer 24

Better, more efficient machinery-loss of jobs. skills and retaliation from other firms.

Question 25

How can you increase productivity?

Answer 25

Training, improved motivation, more and better capital equipment, better raw materials and improved organisation.

Question 26

How can you measure productivity?

Answer 26

Productivity, measuring the relationship between inputs and outputs; unit costs, dividing total costs between number of units and non-productive or idle resources that are not being used.

Question 27

How do consumers benefit from economies of scale?

Answer 27

Low prices can be passed on to the customer at low prices.