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A - Level AQA Economics - Year 1 > Business Economics > Flashcards

Business Economics Flashcards

1
Q

What is production?

A

Manufacturing something in order to sell it

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2
Q

What is productivity?

A

The output per factor employed

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3
Q

What is labour productivity?

A

The output per worker or output per hour worked

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4
Q

What is specialisation?

A

When a person, firm or country focuses on a limited range of goods and services

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5
Q

What is division of labour?

A

A type of specialisation where production is split into different tasks and specific people are allocated to each task

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6
Q

What are the advantages of specialisation?

A

-People can specialise in what they do best, which leads to better quantity and quality of goods
- More efficient production
-Training costs are reduced

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7
Q

Disadvantages of specialisation?

A
  • Workers end up doing the same thing in repetition, can result in boredom
  • Countries become less self-sufficient
  • Lack of flexibility
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8
Q

What is a firm?

A

Any sort of business organisation

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9
Q

What is an industry?

A

A place where all firms provide similar goods & services

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10
Q

What is the formula for profit?

A

Total revenues - Total costs

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11
Q

What is the short run?

A

A period of time where at least one factor of production is fixed

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12
Q

What is the long run?

A

A period of time where all factors of production are variable

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13
Q

What is a fixed cost?

A

A cost that doesn’t vary with output, it must be paid even if the firm is producing nothing

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14
Q

What is a variable cost?

A

A cost that varies with output, as output increases these costs increase

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15
Q

What happens to all costs in the long run

A

They all become variable costs

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16
Q

What are total costs?

A

All the costs involved in producing at a particular level of output

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17
Q

What is the formula for total costs

A

Total costs = total fixed costs + total variable costs

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18
Q

What is average cost?

A

The cost per unit produced

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19
Q

What is the formula for average costs?

A

Average costs = Total costs/ Quantity

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20
Q

What is the formula for average fixed costs?

A

Average fixed cost = Total fixed cost/ quantity

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21
Q

What is the formula for average variable costs?

A

Average variable costs = Total variable costs/ quantity

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22
Q

What is marginal cost?

A

The extra cost incurred as a result of producing an additional unit of output

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23
Q

What are marginal costs affected by?

A

Variable costs

24
Q

Where does the lowest average cost occur?

A

When marginal cost = average cost

25
Q

What is marginal product?

A

The additional output produced by adding one more unit of a factor input

26
Q

What happens as marginal returns rise?

A

Marginal costs fall

27
Q

What happens as marginal returns fall?

A

Marginal costs rise

28
Q

How can productivity be improved?

A

-Through better management and training
- Improved technology

29
Q

What are economies of scale?

A

The cost advantages of production on a large scale

30
Q

What are the types of internal economies of scale?

A
  • Technical
  • Purchasing
  • Managerial
  • Financial
  • Risk-bearing
  • Marketing
31
Q

What are internal economies of scale?

A

Change that occur within a firm

32
Q

What are external economies of scale?

A

Change that occur outside of a firm

33
Q

What are diseconomies of scale?

A

The disadvantages of being big firms

34
Q

What are the diseconomies of scale?

A
  • Communication
  • Control
  • Coordinate
  • Motivation
35
Q

What are increasing returns to scale?

A

When an increase in all factor inputs lead to a bigger overall increase in output

36
Q

What are constant returns to scale?

A

When an increase in all factor inputs lead to the same overall increase in output

37
Q

What are decreasing returns to scale?

A

When an increase in all factor inputs lead a less overall increase in output

38
Q

What are returns to scale?

A

How much output changes as input is increased

39
Q

What is minimum efficient scale of production?

A

The lowest level of output at which the minimum possible average cost can be achieved

40
Q

What is revenue?

A

The money a firm receives from selling their goods & services

41
Q

What is total revenue?

A

The total amount of money received in a period of time from a firm’s sales

42
Q

What is the formula for total revenue?

A

Total revenue = total quantity x price

43
Q

What is average revenue?

A

The revenue per unit sold

44
Q

What is the formula for average revenue?

A

Average revenue = Total revenue / quantity sold

45
Q

What is marginal revenue?

A

The extra revenue received as a result of selling an additional unit of output

46
Q

What does the demand curve of a price taking firm look like?

A

Perfectly elastic (horizontal line)

47
Q

What is PED when total revenue is maximised?

A

PED = -1

48
Q

What is marginal returns at when total revenue is at its maximum?

A

MR = 0

49
Q

When does normal profit occur?

A

When total revenue = total costs

50
Q

When does supernormal profit occur?

A

When total revenue > total costs

51
Q

When can a firm continue to produce in the short - run?

A

When the firm’s total revenue is greater than its total variable costs

52
Q

When is profit maximised?

A

When MC = MR

53
Q

What is the main objective of a firm?

A

To profit maximise

54
Q

When does a firm revenue maximise?

A

When MR = 0

55
Q

When does a firm sales maximimse?

A

When AR = AC

A - Level AQA Economics - Year 1 (12 decks)

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