Production, costs and revenues Flashcards
What is production
Output
What is productivity?
Way of measuring how efficiently a company/economy is producing its output
What is the formula for productivity?
Total output/number of units of labour
What does increased productivity do to average costs
Lowers average costs
What are the factors affecting labour productivity?
Technology
Training
Wages
Infrastructure
Motivation
What is productivity defined as?
The output per unit of input employed
What is division of labour?
Breaking the process down into a sequence of tasks, with workers assigned to particular tasks
What is the short run?
Period of time when at least one factor of production is fixed
What are the advantages of division of labour?
Replace labour with machinery
Lower labour costs
lower average costs
greater producivity
What are the advantages of specialisation?
-become better
-better quality and higher quantity
-more efficient production - more output
-reduced training costs
What are the disadvantages of specialisation?
Boredom
Countries become less self sufficient
Could lead to more structural unemployment
What is specialisation?
A worker only performing one task or a narrow range of tasks. Also different firms specialising in producing gs and s
What are the functions of money
A measure of value
A store of value
A standard of deferred payment (payed at later dates)
What is money
A medium of exchange
What is the long run?
Period of time when all factors of production can be varied
What are variable costs?
Do vary with output
What are fixed costs?
Dont vary with output - rent
What is the marginal cost?
Marginal cost is the extra cost incurred as a result of producing the final unit of output
What is the marginal product?
The additional output produced by adding one more unit of a factor input.
Where is productive efficiency on a costs diagram?
Where MC = AC
What is the law of diminishing returns?
If one variable factor of production is increased while other factors stay fixed, eventually the marginal returns from the variable factor will start to decrease
What is the average product?
The output produced per unit of factor input
When does the AP curve meet the MP curve
When AP curve is at the maximum
What happens to TP when MP is negative
TP decreases