Unit 3 Money and Banking(3.6-3.8)

Question 1

what are the factors of production

Answer 1

land,labour,capital,enterprise

Question 2

Term for when the overall demand for factors of production depends on the demand for the final good or service

Answer 2

Derived demand

Question 3

What does labor intensive production mean

Answer 3

When labor is the main factor of production

Question 4

What kind of process requires relatively high level of skills and is flexible to the different needs of customers(Labour or capital)

Answer 4

Labour intensive production

Question 5

What does capital intensive production require

Answer 5

high levels of investment and little human input

Question 6

disadvantage of capital intensive production

Answer 6

they are inflexible(produce high quantities of standard products

Question 7

What is production

Answer 7

the total output of a business

Question 8

formula for productivity

Answer 8

output/input

Question 9

2 factors productivity of a workforce will depend on

Answer 9

quality and quantity of capital equipment
way work is organised
training that workers have recieved
level of motivation

Question 10

what ways will managers increase productivity

Answer 10

investing in equipment
using rewards to motivate workers
investing in training
making work more efficient

Question 11

What is the formula for Total Cost(TC)

Answer 11

fixed costs+variable costs

Question 12

what is fixed cost

Answer 12

they do not change with the level of output

Question 13

what are variable costs

Answer 13

the cost of materials used in production, they do change with output

Question 14

What is average cost and what is the formula

Answer 14

The measure of cost per unit(Total cost/output)

Question 15

What does avg fixed costs do as output increases

Answer 15

it falls

Question 16

What is revenue

Answer 16

it is the total income of the business(price per unit x number of units sold)

Question 17

What is profit

Answer 17

the difference between revenue and costs( Revenue - costs)

Question 18

What are the 4 business objectives

Answer 18

profit
social
growth
survival

Question 19

What is profit maximisation

Answer 19

when there is the biggest possible difference between total revenue and total costs

Question 20

why do firms want to earn profit

Answer 20

to reward the owners

to use as a source of funds

Question 21

what determines the competitiveness of a market

Answer 21

how many firms are within it and their size

Question 22

What do competitive markets lead to

Answer 22

more innovation since businesses try to improve what they offer
lower prices for consumers as businesses try to become more efficient so their prices can be lower then competitors
better quality products so businesses try to attract customers

Question 23

What is a monopoly

Answer 23

when one firms dominates the market and has a high market share

Question 24

Why can monopolies be dangerous

Answer 24

they can abuse their power and exploit their customers by pushing up the price

Question 25

Why do monopolies lead to a lack of innvation

Answer 25

because there is no pressure to innovate since there arent other dominant firms

Question 26

positives of monopolies

Answer 26

its power may come from being innovative and being better than other firms
it may encourage other businesses to be more innovative so they can replace the monopoly
it may be efficient and gain internal economies of scale