4 - Production, Costs and Revenue Definitions

Question 1

Specialisation

Answer 1

An organisation focusing on the production on a few goods in order to be made efficient.

Question 2

Division of Labour

Answer 2

The separation of a work process into a number of tasks, with each task performed by a separate person or group of people.

Question 3

Trade

Answer 3

A concept involving the purchase and sale of goods and services, with compensation paid to a seller by a purchaser or the exchange of goods or services.

Question 4

Exchange

Answer 4

A marketplace where securities, commodities, and other financial instruments are traded.

Question 5

Production

Answer 5

The process by which different inputs, including capital, labour and land, are used to create outputs in the form of products or services.

Question 6

Short - Run Production

Answer 6

The process of utilising one or more inputs to produce output over a period of time where at least one input is fixed.

Question 7

Long - Run Production

Answer 7

All factors of production and costs are variable.

Question 8

Productivity

Answer 8

How much output can be produced with a given set of inputs.

Question 9

Labour Productivity

Answer 9

The measure of how much output is produced per unit of labour input.

Question 10

Capital Productivity

Answer 10

The measure of how well physical capital is used in providing goods and services.

Question 11

Productivity Gap

Answer 11

The difference between one country’s productivity levels, in comparison with the country’s main export competitors.

Question 12

Short Run

Answer 12

Within a certain time period, at least one input is fixed, while others remain variable.

Question 13

Long Run

Answer 13

All factors of production and costs are variable.

Question 14

Marginal Returns

Answer 14

The rate of return for a marginal increase in investment.

Question 15

Average Returns

Answer 15

The mathematical average of a series of returns generated over a specific period of time.

Question 16

Total Return

Answer 16

The actual rate of return of an investment or a pool of investments over a period.

Question 17

Law of Diminishing Returns

Answer 17

As investment in a particular area increases, the rate of profit from the investment after a certain point, can’t continue to increase if other variables remain constant.

Question 18

Increasing Returns to Scale

Answer 18

Constant returns to scale, output increases by a larger proportion than the increase in inputs during the production process.

Question 19

Constant Returns to Scale

Answer 19

Increasing the number of inputs leads to an equivalent increase in the output.

Question 20

Decreasing Returns to Scale

Answer 20

The proportion of output is less than the desired increased input during the production process.