unit 3: key words

Question 1

production

Answer 1

turning inputs into outputs

Question 2

short-run production

Answer 2

firm adds variable factors of production to fixed factors of production

Question 3

long-run production

Answer 3

occurs when a firm changes the scale of all the factors of production

Question 4

productivity

Answer 4

output per unit of input

Question 5

labour productivity

Answer 5

output per worker

Question 6

capital productivity

Answer 6

output per unit of capital (unit of a man made good)

Question 7

productivity gap

Answer 7

difference between labour productivity in the UK and other developed economies

Question 8

specialisation

Answer 8

worker only performing one task / narrow range.

different firms specialising in producing different goods or services.

Question 9

division of labour

Answer 9

different workers perform different tasks in the course of producing the good or service

Question 10

trade

Answer 10

the buying and selling of goods and services

Question 11

exchange

Answer 11

to give something in return for something else received. money is a medium of exchange.

Question 12

short run

Answer 12

time period

at least one factor of production is fixed

Question 13

long run

Answer 13

time period

no factors of production are fixed

Question 14

fixed costs

Answer 14

cost of production

in short run does not change with output

Question 15

variable cost

Answer 15

costs of production
changes with the amount that is produced
(^ even in short run)

Question 16

total costs

Answer 16

the whole cost of producing a particular level of ouput

Question 17

AVG. cost

Answer 17

total cost of production divided by output

Question 18

long run AVG. cost

Answer 18

long run total cost divided by output

Question 19

economy of scale

Answer 19

as output increases, long run AVG cost falls

Question 20

diseconomy of scale

Answer 20

as output increases, long run AVG. cost rises

Question 21

technical economy of scale

Answer 21

cost saving
changes to the productive process
as scale of production and level of output increases

Question 22

internal economy of scale

Answer 22

cost saving resulting form the growth pf the firm its self

Question 23

external economy of scale

Answer 23

cost saving resulting from the growth of the industry or market of which the firm is a part

Question 24

total revenue

Answer 24

all the money received from the firm from selling its total output

Question 25

AVG revenue

Answer 25

total revenue divided by output

in a single-product firm, AVG. revenue equals the price of the product

Question 26

profit

Answer 26

difference between total costs and total cost of production