SR Cost, Revenue, Product Flashcards
Define marginal revenue
The addition revenue received from selling an extra unit of output
Average revenue
Total revenue/ output
Equals the price
Equals demand
In non-perfect competition
Marginal cost
The cost of producing one extra unit of output
Average cost
Total cost/ output
Total cost
Fixed cost+ variable cost
Law of diminishing returns
Short run at least one factor of production is fixed
States that eventually the employment of an additional variable factor of production marginal product will begin to fall
Increasing SR returns
Initially increasing the number of workers ( variable fop) will see a larger increase in additional output
As labour productivity rises due to the opportunity to implement specialisation and division of labour- tasks are allocated to specific workers repetition highly skilled less waste more output
Low- capacity utilisation, able to increase output by employing existing fixed factors of production
TP rising MP rising AP rising as MP>AP
Diminishing SR returns
Eventually employmnet of additional worker yields less extra output
As capital starts to become a constraint on production
Workers get in each other’s way
Negative effects of specialisation begin to take a significant toll on production, monotonous nature become bored and demotivated high rate of absences and worker turnover 
Falling labour productivity
MP falls, TP rises at a slower rate, AP falling when MP
Negative SR returns
Each additional worker reduces total product
MP is negative
Negative effects of specialisation have huge effect along side capital constraints
AP falling as MP
Define specialisation
Performing a narrow range of tasks
Define division of labour
When production is split up into different tasks each performed by different groups of workers
Benefits of specialisation
Repetition able to become highly skilled
Reduce waste increase amount of output per unit of time
Increase productivity
Could lead to higher quality of goods produced
Increase MP, lower MC and AC
Negative effects of specialisation
Monotonous, repetitive nature of narrow tasks- boring loss of motivation
Higher rate of absences and worker turnover
Lower productivity and higher AC MC and lower MP
Increase structural unemployment as reduces transferable skills, occupational immobility
Produces a chain that relies on others and their productivity to produce a full product 
Marginal product
The change in total output resulting from the additional of the employment of a unit of variable factor of production
Economies of scale
Reductions in long run average costs from increasing scale of production
