Revenue, profit and change pt 2

Question 1

Mechanisation

Answer 1

Moving from labour intensive to capital intensive methods of production e.g. more machinery and less employees

Question 2

Automation

Answer 2

Removing human operators from processes altogether e.g. computer controlled assembly lines

Question 3

Productive efficiency

Answer 3

When a firm is producing at the level where average cost ins minimised (the bottom of the LRAC and ATC curve). Technological changes leads to lower costs, shifting curves down.

Question 4

Dynamic efficiency

Answer 4

Measures the change in productive efficiency over time. A dynamically efficient firm doesn’t improve productive efficiency once but continually.

Question 5

Disruptive innovation

Answer 5

Creates new markets and in doing so, challenges and potentially destroys the existing market

Question 6

Sustaining innovation

Answer 6

Doesn’t create new markets but instead improves/refines existing products