Key Terms 4 - Production, Costs and Revenue Flashcards
Production
Converts inputs or factor services into outputs of goods and services.
Factors of Production
Inputs into the production process such as land, labour, capital and enterprise.
Productivity
Output per unit of input.
Labour Productivity
Output per worker.
Capital Productivity
Output per unit of capital.
Productivity Gap
The difference between labour productivity, e.g., in the UK and in other developed countries.
Firm
A productive organisation which sells its output of goods and/or services commercially.
Specialisation
A worker only performing one task or a narrow range of tasks. Also, different firms specialising in producing different goods or services.
Division of Labour
This concept goes hand in hand with specialisation. Different workers perform different tasks in the course of producing a good or service.
Trade
The buying and selling of goods and services.
Exchange
To give something in return for something else received. Money is a medium of exchange.
Fixed Cost
Cost of production which, in the short run, does not change with output.
Variable Cost
Cost of production which changes with the amount that is produced, even in the short run.
Total Cost
All the cost incurred when producing a particular size of output.
Average Variable Cost
Total variable cost divided by the size of output.
