Production Costs and Revenues Flashcards
Automation
Automatic control; the process by which machines control other machines
Average cost
Total production cost divided by total output (cost per unit of output)
Average revenue
Total revenue divided by total output ( revenue per unit of output)
Capital productivity
Output per unit of capital
Constant returns of scale
When output increases by an equal proportion the increase in inputs
Decreasing returns of scale
When outputs increases by a smaller proportion than the increase in inputs
Diseconomies of scale
When long run average costs rise as output increases
Division of labour
Different workers performing different tasks in a good’s/service’s production, specialising to an extent
Economies of scope
When it’s cheaper to make a range of products
Economy of scale
When long run average costs fall as output rises
External economy of scale
Firms saving resulting from growth of the industry a firm is part of
