production

Question 1

what are the 3 things shown on a production curve

Answer 1

total product
average product
marginal product

Question 2

what is the total product

Answer 2

total volume or amount of final output produced by a firm using given inputs

Question 3

what is the average product

Answer 3

output per unit of input

Question 4

what is the marginal product

Answer 4

the additional output generated by additional input (workers)

Question 5

what is the formula for the marginal product

Answer 5

change in total product/ change in inputs

Question 6

what is the formula for the average product

Answer 6

total product/ units of labour

Question 7

what are the three stages of the production curve

Answer 7

increasing marginal return
decreasing marginal return
negative marginal returns

Question 8

what happens during stage 1 (draw out diagram to help its that sheet we did at the end of last year trust yourself go find it DONT BE LAZY)

Answer 8

TP, AP and MP all increase due to specialization
marginal returns increase

Question 9

what happens during stage 2

Answer 9

due to fixed resources, the MP starts to decrease and TP will increase at a slower rate

Question 10

what happens at stage 3

Answer 10

MP turns negative
TP decreases
when MP=AP the average stops increasing and starts to decrease

Question 11

what does it mean when the MP is above 0

Answer 11

each additional unit of input 1 person is adding something to the total product causing it to rise.

Question 12

what does it mean when MP=0

Answer 12

TP has risen as much as it can before its downfall

Question 13

what does stage of return mean

Answer 13

amount of resources you are going to use to get an output

Question 14

short run definition

Answer 14

a period in which at least 1 resource is fixed- it is not a scale of time

Question 15

what are the types of per unit costs (4)

Answer 15

Average fixed cost

Average variable cost

Average total costs

Marginal costs

Question 16

what are the types of total costs- this is 1 (3)

Answer 16

fixed costs

variable costs

total costs

Question 17

what is a fixed cost

Answer 17

costs for a fixed resource that don’t change with the amount produced e.g rent

Question 18

formula for the average fixed cost

Answer 18

fixed cost/ quantity

Question 19

what is a variable cost

Answer 19

costs for resources that do change with the amount produced e.g raw materials

Question 20

formula for average variable costs

Answer 20

variable costs/ quantity

Question 21

total costs meaning

Answer 21

sum of fixed and variable costs

Question 22

average total costs formula

Answer 22

total costs/ quantity

Question 23

what is marginal return

Answer 23

the additional output gained from installing an additional unit of a factor of production

Question 24

what is the difference between specialization and a division in labor

Answer 24

Specialization refers to a worker or firm focusing on a narrow range of tasks or goods/services where as a
division of labor occurs when different workers perform different tasks in the production process.

Question 25

what is Long Run Average Total Cost Curve (LRATC)

Answer 25

average cost per unit of output over the long run where all inputs are variable

Long run average cost curve shows the lowest total cost to produce a given level of output in the long run

Question 26

what is the minimum efficient scale

Answer 26

smallest level of output in the LR that a firm can produce while taking advantage of internal economies of scale. Resulting in the lowest possible long run average cost (LRAC)

Question 27

where is the MES on a LRAC graph

Answer 27

where increasing economies of scale turns into constant returns to scale

Question 28

what is internal economies of scale

Answer 28

advantages result from efficiencies within the firm itself, leading to a decrease in the average cost of production per unit as output increases. As firms grow larger, they can exploit internal economies of scale by improving operational efficiency, reducing costs, and enhancing productivity.

Question 29

what is internal diseconomies of scale

Answer 29

irm’s cost per unit increases as its production scales up. These inefficiencies arise from problems within the firm as it grows too large, causing the firm to lose the advantages of increasing scale that it previously enjoyed. Internal diseconomies of scale are the opposite of internal economies of scale, where costs per unit decrease with growth.