Production costs and revenue Flashcards
What is production?
Production is the conversion of inputs into outputs
What is productivity?
The efficiency of production
How could you work out labour productivity?
Output over a period of time
over
Number of employees
What is specialisation?
When an individual or firm concentrates on producing a more limited range of products
What is the division of labour?
Specialisation on the level of individual workers
Tip - Think about the NIDL
What are Fixed Costs?
Costs which do not vary with output in the short run
What are Variable Costs?
Costs which vary directly with output in the short run
What are Total Costs?
FC + VC
How do you find the average cost?
TC
over
Units of output
How do you fined the average fixed/variable costs?
FC/VC
over
Units of output
What are internal economies of scale?
Factors which lead to lower unit costs
Name examples of economies of scale
Technical Financial Purchasing Marketing Managerial
Name examples of diseconomies of scale
Ineffective coordination
Lower worker morale
Poor customer service
What are internal diseconomies of scale?
Factors which lead to higher unit costs
How do you find total revenue (TR)?
Price x Quantity sold
