production (2.6)

Question 1

what is profit

Answer 1

The amount of money a producer has left after all the costs have been paid

Question 2

what is productivity

Answer 2

one measure of the degree of efficiency in the use of factors of production in the production process.It is measured in terms of output per unit of input

Question 3

what will an increase of production bring about in an economy

Answer 3

• an increase of employment
• increase in profits for firms
• large economies of scale
• increase in market share if one firm has higher productivity than others
• economic growth
• rise in standard of living

Question 4

how is productivity measured

Answer 4

total output/ total input

Question 5

what are the costs of productivity

Answer 5

• if a firm achieves increased productivity through capital and new machinery this may lead in unemployment as employees will be replaced by the technology
• more productivity also may lead to higher international competitive resulting in other countries to retaliate causing a fall in gdp

Question 6

how can producers increase productivity

Answer 6

• worker specialisation in the production process
• investment in new tech
• improving the skills of workers through training

Question 7

what is average cost

Answer 7

the cost of producing a unit

Question 8

what is total cost

Answer 8

all the costs of the firm added together

Question 9

what is total revenue

Answer 9

the total income of a firm from the sales of its goods or services

Question 10

average cost formula

Answer 10

ac= total cost/ quantity

Question 11

total revenue formula

Answer 11

tr= price x quantity

Question 12

total cost formula

Answer 12

tc=total fixed cost / total variable cost

Question 13

what is average revenue

Answer 13

the revenue per unit sold

Question 14

average revenue formula

Answer 14

total revenue / quantity

Question 15

what is loss

Answer 15

when a firms revenue is less than its costs eg. tr

Question 16

profit formula

Answer 16

total revenue - total cost

Question 17

what are economies of scale

Answer 17

the cost advantage a firm can gain by increasing the scale of production, leading to a fall in average cost

Question 18

what are technical economies

Answer 18

larger firms are able to buy expensive technical equipment as the cost can be spread across a large output

Question 19

what are economies of increased dimension

Answer 19

Increasing the dimensions of any structure will lead to a proportionately larger increase in capacity. e.g. increasing the size of a box from 2m x 2m to 4m x 4m increases the surface area by a factor of 4 while the capacity increases by a factor of 8.

Question 20

what is bulk buying

Answer 20

buying goods in bulk means the cost per unit will decrease

Question 21

what is the division of labour

Answer 21

larger firms are able to split workers up into separate tasks that their employees become specialised and this will result in higher productivity

Question 22

what is financial economies

Answer 22

larger firms are able to borrow more money from banks easier than smaller firms an also with a lower rate of interest.This is because big firms are seen as less of a risk than little firms

Question 23

what is managerial economies

Answer 23

larger firms can afford more specialist staff for functions like finance and marketing

Question 24

what is marketing economies

Answer 24

larger firms are able to use more expensive and efficient marketing methods

Question 25

what are risk bearing economies

Answer 25

larger firms are able to spread the risk by offering a range of products therefore if one product fails there are others to rely on

Question 26

what are research and development economies

Answer 26

larger firms could afford to have their own research and development departments