Production and efficiency Flashcards
What is specialisation?
The production process of a limited range of goods by an individual factor of production or firm or country
What is the division of labour?
Breaking down the production process down into a sequence of tasks, with workers assigned to particular taks
What are the benefits of the division of labour? (2)
Time saving
Improves skills in that task
What is production?
The process that converts factor inputs into outputs of goods and services
What are the advantages of higher productivity? (4)
Lower average costs
Improved competition
Higher profits
Growth
What is a fixed cost?
Costs of production that do not vary with output
What are variable costs?
Costs of production that vary with output
What is total cost?
Fixed + Variable
What are example of fixed costs? (2)
Rent
The cost of buying new equipment
If the volume of units produced increase, what happens to the fixed cost? Why?
Decreases, because the cost is spread out over a higher number of units
What are economies of scale?
An increase in the scale of production leads to a fall in average total costs
What are the economies of scale? (5)
Technological Marketing Managerial Financial Purchasing
What are diseconomies of scale?
An increase in the scale of production leads to a rise in average total costs
What are the diseconomies of scale? (3)
Control
Coordination
Communication
How can a firm avoid diseconomies of scale?
Developments in HR
