Economics Section B

?
Production and Productivity
Production - a process that involves converting raw materials into goods and services. Productivity - output per period/ number of emplyees
1 of 33
Factors of production
Land: Raw Land, Renewable & Non- renewable, Labour: Workforce & Human Capital, Capital:Working Capital & Fixed Capital, Entrepreneur
2 of 33
Entrepreneur
An individual who organizes the other three factors of production, who is responsible for setting up and running the business. Is a risk - taker
3 of 33
Labour Intensive Production
Advantages: Personal touch, uniqueness, flexible Disadvantages: Relatively expensive, inefficient, labour relation problems and shortage of skills
4 of 33
Capital Intensive Production
Advantages: Efficient, Greater Speed, No labour shortages, Accurate production. Disadvantages: Initial high costs, Lacks flexibility, Lacks initiative
5 of 33
Primary Sector
Involves extracting raw materials from the Earth: Forestry, Agriculture, Fishing, Coal Mining
6 of 33
Secondary Sector
Involves converting raw materials into finished or semi - finished goods: Manufacturing, processing and construction
7 of 33
Tertiary Sector
Involves the provision of services: Supermarkets,transportation, leagal advice
8 of 33
De-industrialisation
The decline in the secondary sector to the tertiary sector. This may be due to change in consumer demands, competition , Developing countries tend to have an increase in the public sector, Advances in technology.
9 of 33
Developed countries and Developing Countries
Developed economies = primary sector is nowhere as important as the territory sector. However, in developing countries secondary sector is growing with some expansion on the tertiary sector.
10 of 33
Fixed Costs
Fixed Costs - costs that do not vary with an increase in the level of output: rent, business rates, advertising.
11 of 33
Variable Costs
Fixed Costs - costs that vary with an increase in the level of output: raw materials, packaging, fuel and labour
12 of 33
Total Costs
Total Cost = Fixed Costs + Variable Costs
13 of 33
Average Costs
Total Cost/Quantity produced, cost of producing a single unit of output
14 of 33
Total Revenue
Price* Quantity
15 of 33
Profit
Total revenue - total cost
16 of 33
Economies of Scale
Big firms usually produce more goods cheaply. Size has an effect on average costs of production. As a firm increases it size its average cost falls (due to economies of scale.) Later Diseconomies of scales takes place if it exceeds the MES.
17 of 33
Internal Economies of scale
Cost benefits that an individual firm enjoys;
18 of 33
Purchasing
Bulk Ordering, large amounts at cheaper raters, they get discounts for buying more.
19 of 33
Marketing
A large company will get more sales from marketing and find it more cost effective to operate on their own.
20 of 33
Technical
More specialisation and invesment in capital, more efficient use of a resource than a smaller firm
21 of 33
Finacial
Larger firms are more credible, larger sources to choose from. Large amounts of loans make the firms more attractive.
22 of 33
Managerial
They can afford specialist managers, means more efficent.
23 of 33
Risk-bearing
Wide range of markets into a wide range of markets, more investments means more R&D. They gain a competitive edge.
24 of 33
External Economies of Scale
Falling average costs helps the industry grow as a whole: Skilled labour, Infrastructure,Ancillary and commercial services, Co-operation.
25 of 33
Diseconomies of Scale
Bureaucracy- too many resources are being used in administration. Labour Relations - relations between workers and managers may worsen, resources wasted in solving conflicts. Control and Co-ordination- hard to control, more workers means more costs
26 of 33
Productivity of Land
Fertilisers and pesticides, Irrigation, Drainage, GMO.
27 of 33
Labour Productivity
Total output/ no. of workers, Education and training, improving motivation (Job rotation, Team - working, Empowerment) Improve working pratices
28 of 33
Capital Productivity
Technological aid and new machinary
29 of 33
Externalities
A cost that society pays or benefits from in which they do not have a hand in
30 of 33
Positive
Job creation, Training and education, R & D, New technology, Site development
31 of 33
Negative
Noise pollution, Water & air pollution, Traffic congestion, Resource depletion, over crowding
32 of 33
Social cost and Benefit
Private (Users) cost/benefit + External (Users) cost/benefit
33 of 33

Other cards in this set

Card 2

Front

Factors of production

Back

Land: Raw Land, Renewable & Non- renewable, Labour: Workforce & Human Capital, Capital:Working Capital & Fixed Capital, Entrepreneur

Card 3

Front

Entrepreneur

Back

Preview of the front of card 3

Card 4

Front

Labour Intensive Production

Back

Preview of the front of card 4

Card 5

Front

Capital Intensive Production

Back

Preview of the front of card 5
View more cards

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all Section B resources »