Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

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

Business Economics Flashcards

1
Q

What is production?

A

Manufacturing a good in order to sell it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is productivity?

A

The output per factor employed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is labour productivity?

A

The output per worker or output per hour worked

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is specialisation?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is a firm?

A

Any sort of business organisation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an industry?

A

A place where all firms provide similar goods & services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the formula for profit?

A

Total revenues - Total costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the short run?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the long run?

A

A period of time where all factors of production are variable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a variable cost?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What happens to all costs in the long run?

A

They all become variable costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are total costs?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is the formula for total costs

A

Total costs = total fixed costs + total variable costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is average cost?

A

The cost per unit produced

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the formula for average costs?

A

Average costs = Total costs/ Quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the formula for average fixed costs?

A

Average fixed cost = Total fixed cost/ quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is the formula for average variable costs?

A

Average variable costs = Total variable costs/ quantity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is marginal cost?

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are marginal costs affected by?

A

Variable costs
Law of diminishing returns
Economies and diseconomies of scale

24
Q

Where does the lowest average cost occur?

A

The output level where MC equals AC
This is the productive efficiency point

25
Q

What is marginal product?

A

The additional output produced when one more unit of a factor of production is employed, while other factors remain fixed

26
Q

What happens as marginal returns rise?

A

Marginal product increases
Marginal cost decreases

27
Q

What happens as marginal returns fall?

A

Marginal product decreases
Marginal cost increases

28
Q

How can productivity be improved?

A

Investing in capital
Training workers/Specialisation
Improving management
Economies of scale

29
Q

What are economies of scale?

A

The cost advantages that a firm experiences as it increases production, leading to a decrease in average costs per unit

30
Q

What are the types of internal economies of scale?

A

Technical
Purchasing
Managerial
Marketing
Financial
Risk-bearing

31
Q

What are internal economies of scale?

A

The cost savings that a firm achieves as it grows in size and increases production, lowering average cost per unit

32
Q

What are external economies of scale?

A

The cost savings that occur due to factors outside a firm, typically within an industry or geographic area

33
Q

What are diseconomies of scale?

A

When a firm becomes too large, leading to rising average costs as output increases

34
Q

Why does diseconomies of scale occur?

A

Management issues
Worker alienation
Communication breakdowns
Bureaucracy
Supply chain issues

35
Q

What are increasing returns to scale?

A

When a firm’s output increases by a greater proportion than the increase in inputs

36
Q

What are constant returns to scale?

A

When a firm’s output increases by the same proportion than the increase in inputs

37
Q

What are decreasing returns to scale?

A

When a firm’s inputs increases by a greater proportion than the increase in output

38
Q

What are returns to scale?

A

The change in output resulting from a proportional change in all inputs in the long run

39
Q

What is minimum efficient scale of production?

A

The smallest level of output at which a firm can achieve lowest average costs

40
Q

What is revenue?

A

The total income a firm receives from selling its goods or services

41
Q

What is total revenue?

A

The total income a firm receives from selling a particular good or service

42
Q

What is the formula for total revenue?

A

Price x Quantity

43
Q

What is average revenue?

A

The revenue per unit of output

44
Q

What is the formula for average revenue?

A

Total Revenue / Quantity

45
Q

What is marginal revenue?

A

The additional revenue a firm earns from selling one more unit of output

46
Q

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

A

It’s horizontal at the market price. This is because the firm cannot influence the market price. The firm can sell any quantity of output at the market price, so its demand curve is perfectly elastic at that price

47
Q

What is PED when total revenue is maximised?

A

1

48
Q

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

A

0

49
Q

When does normal profit occur?

A

When a firm’s total revenue equals its total costs, including explicit and implicit costs

50
Q

When does supernormal profit occur?

A

When a firm’s total revenue exceeds its total costs, including explicit and implicit costs

51
Q

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

A

As long as TR covers VC even if it can’ cover FC

52
Q

When is profit maximised?

A

When MC = MR
The cost of producing one more unit of output is exactly equal to the revenue generated from that unit

53
Q

What is the main objective of a firm?

A

To maximise profit

54
Q

When does a firm revenue maximise?

A

When MR = 0

55
Q

When does a firm sales maximise?

A

When MR = 0 and TR is a its peak

AQA A-Level Economics Year 1 (12 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions