4.1 Production Flashcards

1
Q

What is production?

A

Coverts inputs or factor services into outputs of goods and services

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2
Q

What does the production theory lead to?

A

-short-run production theory
-long-run production theory

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3
Q

What does the short-run production theory lead to?

A

The law of diminishing returns and then the short-run cost theory

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4
Q

What does the long-run production theory lead to?

A

Returns to scale-long-run reduction theory

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5
Q

What do both the short-run cost theory and the long-run cost theory lead to?

A

Revenue theory

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6
Q

What are the inputs in the production process?

A

Factors of production:

-land
-labour
-capital
-enterprise

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7
Q

What does capital comprise of?

A

Capital goods which the firm owns or hires together with intellectual capital it owns or hires

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8
Q

What do the entrepreneurs do in terms of production?

A

-what to produce
-how to produce
-whom to produce for

And how much of the other factors of production are employed

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9
Q

What makes up the cost of production?

A

-employing land
-labour and capital
-entrepreneurs own services

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10
Q

What is the productivity gap?

A

Difference between labour productivity

E.g in uk and other developed countries

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11
Q

What is the equation for productivity?

A

Total output/number of workers X100

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12
Q

What is productivity associated with?

A

Labour productivity

Output per worker

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13
Q

What is capital productivity?

A

Output per unit of capital

(Can also be land productivity and entrepreneurial productivity)

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14
Q

What industry is manufacturing extremely important?

A

The manufacturing industry

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15
Q

Who are the G7 countries?

A

-USA
-UK
-Japan
-France
-Germany
-Canada
-Italy

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16
Q

Which is th only country in the G7 that had worse labour productivity than the UK in 2015 and 2016?

A

Japan

17
Q

What are the possible expirations for the UK’s poor labour productivity in comparison with other countries since 2009?

A

-inadequate investment into new capital goods
-low wages in UK economy
-employers keeping employees on during recessions

18
Q

What has the fall in labour productivity done in the long and short run?

A

Short-run: helped employment in the UK
Long-run: unknown but not favourable

19
Q

What is a firm?

A

-productive organisation which sells its output of a good and/or services commercially

20
Q

Why don’t firms get continuously bigger according to Ronald Coase?

A

-Gaines from economies of scale are defeated by the cost of bureaucracy

-as the firm gets larger there may be decreasing returns to the Entrepreneurial function

21
Q

According to Ronald Coase why do firms exist?

A

They reduce transaction costs

(Information costs,bargaining costs and cost of keeping trade secrets)

22
Q

What is the aim of lean manufacturing?

A

Combine the best of both craftwork and mass production

-uses less of each input (labour,machinery, space and time)

Mass production focuses on reducing defects to a tolerable level

LEAN PRODUCTION SEEKS TO ELIMINATE ALL DEFECTS