Production Costs and Revenue Flashcards
What is production ?
Production is a process where inputs , such as factors of production is converted into a final output
Define productivity
Output per unit input per time
Define specialisation
Specialisation is when each region completes a specific task in large production processes.
What is the pros of specialisation ?
- Higher output and thereby quality increases
- Greater Variety of goods
- Increased chance of EOS
- Lower Average Costs ( more competition and lower prices)
What are the cons of specialisation ?
- Work can be repetitive and lose motivation
- Structural Unemployment
- Lack of Variety
- Occupational Immobility
What is comparative advantage ?
Comparative advantage us when a firm can produce a good at a lower opportunity costs to another
What is absolute advantage ?
Absolute advantage is when a country can produce more with the same factor inputs
What are the functions of money?
Money acts like a store of value, measure of value , standard of deffered payment and a medium of exchange.
Define Short run
In the short run , at least on factor of production cannot change, so there is at least one fixed costs
Define Long-Run
Long run is when all the factor inputs can change , so all costs are variable
What is the marginal return of factor?
The marginal return of a factor is the extra output derived per extra unit of the factor employed
What is average returns ?
Average return is the output per unit of input
What is total return ?
Total return is the total output produces by a no of units of factors over period of time
Define the law of diminishing returns
This is when the variable factor of production is added to a fixed factor of production , eventually the marginal and then the average returns.
What is the returns to scale?
The rate by which output changes if scale of all factors of production is changed
