production and efficiency L5 M1 economics
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production and efficiency L5 M1 economics - Leaderboard
production and efficiency L5 M1 economics - Details
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53 questions
| 🇬🇧 | 🇬🇧 |
| Whats supernormal profit | When a firms total sales revenue exceed the total costs of production |
| What is production | The total output of goods and services produced by an individual firm or country |
| What is productivity | A measurements of the rate of production by one or more factors of production |
| Equation for productivity | Productivity = total output per period of time / number of units of factor of production |
| What is labour productivity | Output per worker per unit of time |
| Equation for labour productivity | Labour productivity = total output per period of time / number of units of labour |
| What is specialisation | Involves an individual worker, firm, region or country producing a limited range of goods or services |
| What is division of labour | Specialisation at the level of an individual worker |
| What is exchange | Where one thing is traded for something |
| What is short run | A period of time in which the availability of at least one factor of production is fixed |
| What is long run | A period of time over which all factors of the production can be varied |
| What are fixed costs | Costs of production that do not vary with the level of output in the short put |
| What are variable costs | Costs of production that vary with the level of output |
| Average fixed costs equation | AFC = total fixed costs / output |
| Average variable costs equation | AVC = total variable costs / output |
| Total costs equation | TC = total fixed costs + total variable costs |
| Average total cost equation (1) | Average total cost = total costs / output |
| Average total costs equation (2) | ATC = average fixed costs + average variable costs |
| What are total costs | The addition of fixed costs and variable costs at a given level of output |
| What are average total costs | Total costs of production divided by the number of units of output |
| What is marginal costs | The adding to a firms total costs from making an additional unit of output |
| What is the law of diminishing returns | When additional units of variable factors of production are added to a fixed factor, marginal output or product will eventually decrease |
| What are returns to scale | The relationship between increasing the quantity of a firms input ad the proportional change in output |
| What is increasing returns to scale | Where an increase in the quantity of a firm inputs leads to a proportionally greater change in output |
| What are constant returns to scale | Where an increase in the quantity of a firms inputs leads to a proportionally identical change in output |
| Decreasing returns to scale | Where an increase in the quantity of a firms input leads to a proportionally lower change in output |
| What are financial economies of scale | The larger and more reputable a firm is, the more likely it is that banks and other lenders will deem its credit worthy and less risky recipient of loan funds |
| What are economies of scale | The reduced average total costs that firms experience by increasing output in the long run |
| What are internal economies of scale | A reduction in long run average total costs arising from growth of the firm. |
| What are technical economies of scale | Larger business can generally afford the latest specialist capital equipment which is often v expensive |
| What are marketing economies of scale | Larger firms are likely to have huge advertising budgets |
| Managerial economies of scale | Larger firms can afford to recruit the highest profile chief executive officers |
| External economies of scale | Reductions in long run average total costs rising from the growth of the industry in which a firm operates |
| Diseconomies of scale | Increases in the avg total costs that firms may experience by increasing output in the long run |
| What is total revenue | The money a firm receives from selling its output |
| What is average revenue | Total revenue divided by units of output. equal to price in a firm that sells one product at a fixed price |
| Total revenue equation | Total revenue = price x quantity |
| Average revenue equation | Total revenue / quantity |
| What is average revenue the same as? | Price!!!!!!!!! |
| What is marginal revenue | The addition to a firms total revenue from selling an additional unit of output |
| Equation for marginal revenue | Change in total revenue / change in output |
| What is perfect competition | Ideal type of market structure where all producers and consumers have full and symmetric information and no transaction costs. |
| Perfect competition is characterised by? | 1. a large number of buyers and sellers 2. no firm is large enough to influence the market price -- each is a price taker 3. perfect knowledge of the market 4. no barriers to entry or to exit from the markets 5. each firm sells an identical product |
| What is a monopoly | A market structure that consists of a single seller or producer and no close substitutes. |
| Total profit equation | Total rev - total cost |
| Whats normal profit | Normal profit is often viewed in conjunction with economic profit. |
| Whats supernormal profit | When a firms total sales revenue exceed the total costs of production |
| Disadvantage of monopoly | Inefficiencies, a lack of innovation, and higher prices |
| Advantages of monopoly | Without competition, monopolies can set prices and keep pricing consistent and reliable for consumers. |
| Monopoly formula | He monopoly price and quantity are found where marginal revenue equals marginal cost (MR = MC): PM and QM. |