1.3 Production, costs and revenue Flashcards
Definition of production
The total output of goods and services produced by an individual, firm, or country
Definition of productivity
A measurement of the rate of production by one or more factors of production
Definition of labour productivity
output per worker per period of time
What can cause improvements in labour productivity (3)
- more and better education and training
- increased motivation
- advances in technology, leading to workers being equipped with the latest capital equipment
Definition of specialisation
where an individual worker, firm, region or country produces a limited range of goods or services (as they specialise in the production of a particular good)
What can cause improvements in labour productivity (3)
- more and better education and training
- increased motivation
- advances in technology, leading to workers being equipped with the latest capital equipment
Definition of specialisation
where an individual worker, firm, region or country produces a limited range of goods or services (as they specialise in the production of a particular good)
Definition of division of labour
workers in a firm completing a specific part of production
What are the benefits of specialisation? (4)
- repetition of a limited range of activities can increase skill, leading to a worker becoming an expert
- time is saved by not moving between tasks, meaning productivity increases
- as tasks are broken up into smaller ones, it becomes efficient to use specialist machinery
- division of labour allows people to work to their natural strengths
Definition of short run
a period of time in which the availability of at least one factor of production if fixed
Definition of long run
a period of time over which all factors of production can be varied
Definition of fixed costs
