Micro Economics Definitions .3

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  • Created by: Soph
  • Created on: 03-04-16 18:01
Production
This is the process of converting inputs or factor services into outputs of goods and services
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Short-run production
This occurs when a firm adds variable factors of production to fixed factors of production
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Long-run production
This occurs when a firm changes the scale of all the factors of production
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Productivity
Output per unit of input
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Labour productivity
Output per worker
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Capital productivity
Output per unit of capital
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Specialisation
This is when a worker only performs one tasks or a narror range of tasks
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Division of labour
This is a form of specialisation in which different workers perform different tasks in the course of producing a good or service
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Trade
The buying and selling of goods and services
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Exchange
Money is a medium of exchange
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Total cost
Fixed cost + Variable cost
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Average cost
This is the total cost of production divided by output
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Economies of scale
As output increases, long-run average cost decreases
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Diseconomies of scale
As output increases, long-run average cost rises
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Long-run average cost
Long-run total cost divided by output
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Internal economy of scale
These are the costs saved resulting from the growth of the firm itself
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External economy of scale
These are the costs saved resulting from the growth of the market of which the firm is a part
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Total revenue
PxQ
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Average total revenue
Total Revenue/ Output.
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Profit
This is the difference between total revenue and total costs of production
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Other cards in this set

Card 2

Front

This occurs when a firm adds variable factors of production to fixed factors of production

Back

Short-run production

Card 3

Front

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

Back

Preview of the back of card 3

Card 4

Front

Output per unit of input

Back

Preview of the back of card 4

Card 5

Front

Output per worker

Back

Preview of the back of card 5
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