production, costs and revenue

Question 1

production

Answer 1

The total output of goods and services produced by an individual, firm or country

Question 2

short run production

Answer 2

a period during which at least one factor of production is fixed. Typically, this factor is capital, such as machinery or buildings. In the short run, firms can only adjust variable inputs like labor and raw materials to meet changes in demand.

Question 3

long run production

Answer 3

The long run is a situation in economics wherein all factors of production and costs are variable. The long run allows firms to operate and adjust all costs. (There are also a variable number of producers in the market, which means firms are able to enter and leave the market during times of profitability and loss. In the long run, profits are ordinary, so there are no economic profits. While a firm may be a monopoly in the short term, it may expect competition in the long run.)

Question 4

productivity

Answer 4

a measrurment of the rate of production by one or more factors of production

Question 5

labour productivity

Answer 5

output per worker per unit of time/
the amount of real gross domestic product (GDP) produced by an hour of labor. Growth in labor productivity depends on three main factors: saving and investment in physical capital, new technology, and human capital.

Question 6

capital productivity

Answer 6

output per unit of capital

Question 7

productivity gap

Answer 7

the difference between labour productivity e.g., in the Uk and in other developed economies

Question 8

specialisation

Answer 8

We’re an individual worker, firm, region or country produces a limited range of goods or services

Question 9

Division of Labour

Answer 9

specialisation at the level of an individual worker

Question 10

Trade

Answer 10

the Buying and setting of goods and /or services

Question 11

exchange

Answer 11

To give something in return for Something else received. Is a medium of exchange

Question 12

Short run

Answer 12

A period of time in which the availability of at least one factor of production is fixed

Question 13

Long run

Answer 13

A period of time over which all factors of production can be varied And this may increase or reduce its scale of output

Question 14

Marginal returns

Answer 14

The change in quantity of total output resulting from the employment of one more Worker holding all the other factors of production fixed

Question 15

Average returns

Answer 15

Total output divided by the total number of workers employed

Question 16

Total returns

Answer 16

total output produced by all the workers employed by firm

Question 17

Law of diminishing returns

Answer 17

When additional units of variable factors of production are added to a fixed factor, marginal output or product will eventually decrease

Question 18

Constant returns to scale

Answer 18

Where an increase in the quantity of a firm’s inputs leads to a proportionately identical change in output

Question 18

Increasing returns to scale

Answer 18

Aware an increase in the quantity of a firm’s inputs leads to a proportionally greater change in output

Question 18

Decreasing returns to scale

Answer 18

Where an increase in the quantity of a firm’s inputs leads to a proportionally lower change in output

Question 19

Returns to scale

Answer 19

The relationship between increases in the quantity of a firm’s inputs and the proportional change in outputs

Question 20

Marginal cost

Answer 20

The addition to a firm’s total costs from making an additional unit of output

Question 21

Total costs

Answer 21

The Addition of fixed costs and variable costs to a given level of output

Question 22

Average total cost

Answer 22

Total cost of production divided by the number of units of output

Question 23

long run average cost

Answer 23

Long run average cost is the cost per unit of output feasible when all factors of production are variable

Question 24

technical economy of scale

Answer 24

And larger businesses can generally afford the latest specialist capital equipment which is often very expensive.

Question 25

internal economies of scale

Answer 25

reductions in long run average total costs arising from growth of the firm

Question 26

external economies of scale

Answer 26

reductions in long run average total costs arising from growth of the industry in which it operates in

Question 27

diseconomies of scale

Answer 27

increases in average total costs that firms ma experience by increasing output in the long run

Question 28

minimum efficent scale

Answer 28

The lowest level of output at which average total cost of production are minimised

Question 29

Total revenue

Answer 29

the money a farm receives from selling its output, calculated by price times quantity sold

Question 30

Average revenue

Answer 30

Total revenue divided by units of output. Equal to price in a firm that sells 1 product at a fixed price

Question 31

Marginal revenue

Answer 31

The addition to a firms total revenue from selling an additional unit of output

Question 32

Perfect competition

Answer 32

A market that displays the six conditions of: a large Number of buyers and sellers, perfect market information, the ability to buy and sell as much is desired at the ruling market price, the inability of an individual buyer or seller to influence the market price, a uniform or homogeneous product, anti no barriers to entry or exit in the long run

Question 33

Monopoly

Answer 33

One firm only in a market/ Monopolistic competition- a market structure in which firms have many competitors but each one sells a slightly different product

Question 34

Price taker

Answer 34

A firm which is so small that there has to accept the roiling price. If the firm raises its price it loses all of its sales if it cuts its price it gains no advantage

Question 35

Price maker

Answer 35

When a firm faces a downward sloping demand curve for its own product, it possesses the market power to set the price at which it sells the product

Question 36

Quantity setter

Question 37

Profit

Answer 37

The difference between total revenue and total costs

Question 38

Normal profit

Answer 38

The minimum level of profit required to reward the entrepreneur for taking a risk and therefore to stay in a particular line of business

Question 39

Supernormal profit

Answer 39

Profit over and above normal profit, sometimes referred to as abnormal or access profit

Question 40

Invention

Answer 40

The creation of a product or process

Question 41

Innovation

Answer 41

New products and production processes that are developed into marketable goods or services

Question 42

Technological change

Answer 42

A time is to describe the overall effect of invention, innovation and the diffusion or spread of technology in the economy

Question 43

Creative destruction

Answer 43

Where technology change leads to the development of new disruptive products that render existing products obsolete

Question 44

Productive efficiency

Answer 44

For the economy as a whole occurs when it is impossible to reduce more of one good without producing less of another. It’s a cause when the average total cost of production is minimised

Question 45

Dynamic efficiency

Answer 45

Measures improvements in productive efficiency that occur in the long run over time