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Economics > 3.1.4-Production, costs, revenue and profit > Flashcards

3.1.4-Production, costs, revenue and profit Flashcards

1
Q

What are average costs (AC)?

A

The cost of producing one thing. Total cost divided by quantity.
Formula: TC / Q

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2
Q

What are average fixed costs (AFC)?

A

The fixed costs of producing one thing. Fixed costs divided by quantity.
Formula: FC / Q

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3
Q

What is average revenue (AR)

A

The amount of revenue gained from producing one thing .Total revenue divided by quantity
Formula: TR / Q

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4
Q

What are average variable costs (AVC)

A

The variable costs of producing one thing. Variable costs divided by quantity.
Formula: VC / Q

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5
Q

What is the break even point?

A

Where total revenue = total cost (no profit or loss made)

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6
Q

What are business objectives?

A

Specific and measurable targets set in order to meet the aims of the business

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7
Q

What is cash?

A

Notes, coins and debit cards

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8
Q

What are costs?

A

The costs (fixed, variable, direct, indirect) experienced with running a business

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9
Q

What are fixed costs?

A

Costs that have to be paid regardless of level production

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10
Q

What is marginal cost (MC)?

A

The additional cost of producing an extra unit

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11
Q

What is marginal revenue (MR)?

A

The additional revenue of producing an extra unit

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12
Q

What is profit?

A

Revenue-costs (the money left over after all costs are deducted
Formula: TR - TC

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13
Q

What is revenue?

A

The amount of income recieved by the business over a given time period
Formula: P x Q

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14
Q

What are total costs?

A

Fixed costs + Total variable costs
Formula: FC + TVC

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15
Q

What are variable costs?

A

Costs that are dependent on the level of production

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16
Q

What are assembly plants?

A

Factories

17
Q

What is bureaucracy?

A

Paperwork that clogs up the operations of departments

18
Q

What is de-industrialisation?

A

The decline in the secondary industry (manufacturing) the UK went through in the 1980’s

19
Q

What is production?

A

The transformation of inputs into goods and services

20
Q

What is productivity?

A

A measure of output per unit of input

21
Q

What are diseconomies of scale?

A

When an increase in the scale of production results in increased average costs (e.g. over-time pay)

22
Q

What are economies of scale?

A

When increases in production lead to reduced total average costs (e.g. discount for bulk buying)

23
Q

What are external economies of scale?

A

Benefits a firm receives from a growth in the industry

24
Q

What are financial economies of scale?

A

Gaining access to better rates and financial specialists

25
Q

What are internal economies of scale?

A

Benefits a firm receives from a growth in size

26
Q

What are managerial economies of scale?

A

A firm can attract the best staff into the company

27
Q

What are marketing economies of scale?

A

Large marketing expenses can be spread over a larger amount of products/services

28
Q

What are purchasing economies of scale?

A

Bulk buying brings down external costs

29
Q

What are risk-bearing economies of scale?

A

The ability of firms to spread its risks over a large number of areas

30
Q

What are technical economies of scale?

A

Firms can afford better, more advanced machinery to produce goods

31
Q

What are the 4 main business objectives?

A
  • Maximising profit
  • Sales growth
  • Increasing market share
  • Social enterprises
32
Q

What are some ethical and moral considerations of producers?

A
  • Ensuring sufficient business taxes are paid to central governments
  • Equality of pay for staff
  • Environmental impact
  • Exploitation of workers living in relative poverty
33
Q

What are methods to increase productivity?

A
  • Use of technology and machinery
  • Training of workers
  • Improving morale at the workplace
  • More effective management
34
Q

What are the benefits of increased productivity?

A
  • Output should increase leading to higher sales
  • Costs are lowered leading to higher possible profit levels
  • Lowering costs could be passed on to a reduction in price-resulting in the business becoming more competitive
  • It could improve the quality of the products-improved competitiveness
  • Higher productivity could lead to higher wages for workers
35
Q

What are the different types of economies of scale?

A
  • Technical economies
  • Purchasing economies
  • Marketing economies
  • Financial economies
  • Managerial economies
  • Risk-bearing economies
36
Q

What are the different types of diseconomies of scale?

A
  • Communication problems
  • Co-ordination and control problems
  • Morale

Economics (13 decks)

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