Keywords Flashcards
What can productivity lead to?
Economic growth and less unemployment.
What does production refer to?
Refers to the total output of goods and services in the production process.
What does productivity refer to?
How efficient the process of production is and how well firms are using their resources.
[calculation might be wrong]
Productivity = total sales ➗ sales staff
Capital intensive
Capital intensive is where a large amount of machinery is used (a capital resource) more than labour.
Ex for Capital intensive: car manufacturing.
Labour intensive
Is a larger amount of human resources compared to technological resources.
Ex for Labour intensive: Private coach.
Economies of scale
Cost advantages that can occur when a company increases their scale of production and becomes more efficient, resulting in a decreased cost-per-unit.
Innovation
Is the commercialisation of new ideas and products. It is a vital source of productivity.
Fixed cost
Costs that a firm has to pay no matter how much it produces or sells.
Variable cost
Are costs of production that changes depending when the level of output changes.
Total cost
The sum of all fixed and variable costs of production.
Average fixed cost
Refers to a firms fixed cost per unit of output.
How is Total Cost calculated?
Total cost = fixed costs + variable costs
How is Average Fixed Cost calculated?
Average fixed cost =
Fixed cost ➗ Output level
Average Variable Cost
Refers to the variable cost per unit of output.
Average Total Cost
Is the cost per unit of output.
Ex: the total cost of making one product.
