Flashcards
Part 1.2: Production, costs and revenue
Flashcards do conjunto (46)
- 1FirmA productive organisation which sells its output of goods or services commercially.
- 2Marginal returns of labourThe change in the quantity of total output resulting from the employment of one more worker, holding all the other factors of production fixed.
- 3Law of diminishing returnsA short-term law which states that as a variable factor of production is added to a fixed factor of production, eventually both the marginal and average returns to the variable factor will begin to fall.
- 4Average returns of labourTotal output divided by the total number of workers employed.
- 5Total returns of labourTotal output produced by all the workers employed by a firm.
- 6ProductivityOutput per unit of input.
- 7Labour productivityOutput per worker.
- 8Returns to scaleThe rate by which output changes if the scale of all the factors of production is changed.
- 9PlantAn establishment, such as a factory, workshop or a retail outlet, owned and operated by a firm.
- 10Increasing returns to scaleWhen the scale of all the factors of production employed increases, output increases at a faster rate.
- 11Constant returns to scaleWhen the scale of all the factors of production employed increases, output increases at the same rate.
- 12Decreasing returns to scaleWhen the scale of all the factors of production employed increases, output increases at a slower rate.
- 13Economy of scaleAs output increases, long-run average cost falls.
- 14Diseconomy of scaleAs output increases, long-run average cost rises.
- 15Long-run average costCost per unit of output incurred when all factors of production or inputs can be varied.
- 16Optimum firm sizeThe size of firm capable of producing at the lowest average cost and thus being productively efficient.
- 17Minimum efficient scaleThe lowest output at which the firm is able to produce at the minimum achievable LRAC.
- 18Internal economies and diseconomies of scaleChanges in long-run average costs of production resulting from changes in the size or scale of a firm or plant.
- 19External economy of scaleA fall in long-run average costs of production resulting from the growth of the market or industry of which the firm is a part.
- 20External diseconomy of scaleAn increase in long-run average costs of production resulting from the growth of the market or industry of which the firm is a part.
- 21Marginal costAddition to total cost resulting from producing one additional unit of output.
- 22Average fixed costAFC = TFC / Q.
- 23Average variable costAVC = TVC / Q.
- 24Average total costATC = AFC + AVC
- 25Long-run marginal costAddition to total cost resulting from producing one additional unit of output when all the factors of production are variable.
- 26Long-run average costTotal cost of producing a particular level of output divided by the size of output when all the factors of production are variable.
- 27Total revenueAll the money received by a firm from selling its total output.
- 28Average revenueTotal revenue divided by output.
- 29Marginal revenueAddition to total revenue resulting from the sale of one more unit of the product.
- 30Price-takerA firm which is so small that it has to accept the ruling market price. If the firm raises its price, it loses all its sales; if it cuts its price, it gains no advantage.
- 31Price-makerWhen a firm faces a downward-sloping demand curve for its product, it possesses the market power to set the price at which it sells the product.
- 32Quantity-setterWhen a firm faces a downward-sloping demand curve for its product, it possesses the market power to set the quantity of the good it wishes to sell.
- 33ProfitThe difference between total sales revenue and total cost of production.
- 34Profit maximisationOccurs at the level of output at which total profit is the greatest.
- 35Normal profitThe minimum profit a firm must make to stay in business, which is, however, insufficient to attract new firms into a market.
- 36Abnormal profitProfit over and above normal profit. AKA supernormal profit.
- 37Technological changeA term that is used to describe the overall effect of invention, innovation and the diffusion or spread of technology in an economy.
- 38InventionMaking something entirely new; something that did not exist before at all.
- 39InnovationImproves on or makes a significant contribution to something that has already been invented, thereby turning the results of invention into a product.
- 40MechanisationProcess of moving from a labour-intensive to a more capital-intensive method of production, employing more machines and fewer workers.
- 41AutomationAutomatic control where machines operate other machines.
- 42Productive efficiencyThe level of output at which average costs of production are minimised.
- 43Dynamic efficiencyOccurs in the long run, leading to the development of new products and more efficient processes that improve productive efficiency.
- 44Monopolistic competitionA market structure in which firms have many competitors, but each one sells a slightly different product.
- 45DuopolyTwo firms only in a market.
- 46Creative destructionCapitalism evolving and renewing itself over time through new technologies and innovations replacing older technologies and innovations.
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- A2 Economics FlashCards sobre Part 1.2: Production, costs and revenue, criado por Alex Maas em 01-03-2017.
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- Alex Maas
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