Production, Costs And Revenue

Question 1

What is automation?

Answer 1

Automatic control; the process by which machines control other machines

Question 2

What is average cost?

Answer 2

Cost per unit of output

Question 3

What is average revenue?

Answer 3

Revenue per unit of production

Question 4

What is capital productivity?

Answer 4

Output per unit of capital

Question 5

What is constant returns to scale?

Answer 5

When output increases by a smaller proportion than the increase in input

Question 6

What is decreasing returns to scale?

Answer 6

When output increases by a smaller proportion than the increase in inputs

Question 7

What is diseconomies of scale?

Answer 7

When long run average costs rise as output rises

Question 8

What is the division of labour?

Answer 8

Different workers performing different tasks in a good/service production specialising to an extent

Question 9

What is economies of scope?

Answer 9

When it’s cheaper to make a range of products

Question 10

What are Economies of scale?

Answer 10

When long run average cost fall as output rises

Question 11

What are external economy of scale?

Answer 11

Firms saving resulting from growth of the industry a firm is part of

Question 12

What are fixed costs?

Answer 12

Costs of production that do not vary with output, only in the short run

Question 13

What are increasing returns to scale?

Answer 13

When output increases by a larger proportion than he increase in inputs

Question 14

What are internal economy of scale?

Answer 14

Firms saving resulting from growth of the firm itself

Question 15

What is labour productivity?

Answer 15

Output per worker

Question 16

What is the long run?

Answer 16

Time period in which none of the factors of production are fixed and all can be varied

Question 17

What is the long run average cost?

Answer 17

Long run total cost per unit of output

Question 18

What is long run production?

Answer 18

When a firm changes the cake of all factors of production

Question 19

What is mechanisation?

Answer 19

When a firm transfers from becoming more labour intensive to becoming more capital intensive

Question 20

What is minimum efficient scale (MES)?

Answer 20

The lowest level of output at which average costs are minimised

Question 21

What are normal profits?

Answer 21

The minimum profit required to keep a firm operating in an industry

Question 22

What are operating costs?

Answer 22

Same as variable costs

Question 23

What are overheads?

Answer 23

Same as fixed costs

Question 24

What is production?

Answer 24

A set of processes that convert inputs into outputs

Question 25

What is productive efficiency?

Answer 25

Minimised average total cost

Question 26

What is productivity?

Answer 26

Output per unit of input

Question 27

What is the short run?

Answer 27

Time period I’m which at least one of the factors of production are fixed and cannot be varied

Question 28

What is specialisation?

Answer 28

A worker only performing a specific task or a small range of tasks

Question 29

What are sunk costs?

Answer 29

Non-recoverable costs of entering a market

Question 30

What are supernormal profit?

Answer 30

Any level of profit over and above normal profit

Question 31

What is x-inefficiency?

Answer 31

When a firm lacks the incentive to control costs. This causes the average cost of production to be higher than necessary