Costs Of Production Flashcards
Definition of short run
At least one factor input is fixed
Definition of long run
All factors of production are variable
Definition of specialisation
Where resources are used to concentrate on producing one particular product
Advantages of specialisation
- increase efficiency and productivity
- more output
- time saved
- lower cost per unit
Disadvantages of specialisation
- workers may become bored, less efficient
- reduced flexibility (if one worker is absent, no one else can step up)
Definition of labour productivity
Output per worker per period of time
Equation for labour productivity
Total output per period
———————————
No of units of labour
Definition of fixed costs (indirect)
Costs that arise in a business but remain the same no matter how many products are produced
Definition of variable costs (direct)
Money paid out in direct proportion to how many products are produced
Definition of total costs
The whole cost of producing at a particular level of output
Definition of average cost
The cost per unit of output
Definition of Average revenue
The average amount received from selling each unit
Definition of marginal revenue
The amount received from selling one extra unit of output
Definition of marginal cost
The cost of one more or one fewer units of production
Equation for total costs
Fixed cost + variable costs
