3.1.4 Flashcards
What are average costs?
The cost of producing one thing. Total cost divided by quantity.
What are average fixed costs?
The fall significantly when output increases.
What is average revenue?
Total revenue/number of products or services sold
What are average variable costs?
Initially downward sloping as increasing returns to labour and economies of scale are achieved with increased output and then they rise with output.
What is break-even point?
Total revenue=total cost
What are business objectives?
Specific and measurable targets set in order to meet the aims of the business.
What is cash?
Notes, coins and debit cards.
What are costs?
The costs experienced in running a business.
What are fixed costs?
Costs that have to be paid regardless of level production.
What is a marginal cost?
The additional cost of producing an extra unit.
What is profit?
Revenue-costs
What is revenue?
Amount of income received by the business over a given period of time.
What are total costs?
Fixed costs+total variable costs
What are variable costs?
Costs that are dependent on the level of production.
What are assembly plants?
Factories.
What is bureaucracy?
Paperwork that clogs up the operations of departments.
What is deindustrialisation?
Decline in manufacturing the UK went through in the 80s and moved to the tertiary sector.
What is production?
The transformation of inputs into goods or services, the total output of goods/services over a period of time.
What is productivity?
Measure of output per unit of input.
What is diseconomies of scale?
When an increase in the sale of production results in increased average cost e.g. overtime pay
What are economies of scale?
When increases in production lead to reduced total average costs.
What are financial economies of scale?
Gaining access to better rates and financial specialists.
What are external economies of scale?
Benefits a firm receives from a grow in the industry.
What are marketing economies of scale?
Large marketing expenses can be spread over a larger amount of products/services.
What are internal economies of scale?
Benefits a firm receives from a growth in size.
What are purchasing economies of scale?
Bulk buying brings down external costs.
What are managerial economies of scale?
A firm can attract the best staff into the company.
What are risk bearing economies of scale?
Ability of firms to spread its risk over a large number of areas.
What are technical economies of scale?
Can afford the most efficient machinery or capital equipment. Increased dimensions of containers, principle of multiples when using the same machine twice.
How is revenue generated?
Through trading or through loans or sale of assets.
What are 2 examples of fixed and variable costs?
Fixed: Rent and rates for premises and wages and salaries not linked to output
Variable: Raw materials, other bought in supplies
Who are producers?
They may be individuals, businesses or the government.
What are the benefits of productivity?
Employment, increased profits, increased economies of scale, increased market share.
What are the costs of productivity?
Better, more efficient machinery-loss of jobs. skills and retaliation from other firms.
How can you increase productivity?
Training, improved motivation, more and better capital equipment, better raw materials and improved organisation.
How can you measure productivity?
Productivity, measuring the relationship between inputs and outputs; unit costs, dividing total costs between number of units and non-productive or idle resources that are not being used.
How do consumers benefit from economies of scale?
Low prices can be passed on to the customer at low prices.
