unit 3: key words Flashcards
(26 cards)
production
turning inputs into outputs
short-run production
firm adds variable factors of production to fixed factors of production
long-run production
occurs when a firm changes the scale of all the factors of production
productivity
output per unit of input
labour productivity
output per worker
capital productivity
output per unit of capital (unit of a man made good)
productivity gap
difference between labour productivity in the UK and other developed economies
specialisation
worker only performing one task / narrow range.
different firms specialising in producing different goods or services.
division of labour
different workers perform different tasks in the course of producing the good or service
trade
the buying and selling of goods and services
exchange
to give something in return for something else received. money is a medium of exchange.
short run
time period
at least one factor of production is fixed
long run
time period
no factors of production are fixed
fixed costs
cost of production
in short run does not change with output
variable cost
costs of production
changes with the amount that is produced
(^ even in short run)
total costs
the whole cost of producing a particular level of ouput
AVG. cost
total cost of production divided by output
long run AVG. cost
long run total cost divided by output
economy of scale
as output increases, long run AVG cost falls
diseconomy of scale
as output increases, long run AVG. cost rises
technical economy of scale
cost saving
changes to the productive process
as scale of production and level of output increases
internal economy of scale
cost saving resulting form the growth pf the firm its self
external economy of scale
cost saving resulting from the growth of the industry or market of which the firm is a part
total revenue
all the money received from the firm from selling its total output
