converts inputs/services of FofP into final output
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Productivity
output per worker per period of time
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Division of Labour
Dividing the production process into different stages which enables workers to specialize in different tasks - increases overall efficiency & lowers AC of production
3 of 17
firm
business enterprise that produces/deals in/exchanges goods/services to earn revenue to cover production costs they incur
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SR & LR
SR = time period in which at least one FofP is fixed and cannot be varied - only way to increase production is to add more variable factors LR = Time period in which no FofP are fixed = can all be varied
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Marginal Returns of Labour
additional total output resulting from employment of one more worker
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Average Returns of Labour
Total output divided by total number of workers employed
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Total returns of Labour
Total output produced by all workers employed by a firm
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Law of diminishing returns
As a variable FofP (labour) is added to fixed FofP (capital), eventually marginal & average returns begin to fall = Short term problem
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returns to scale
changes in output of a firm after increase in FofP inputs
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internal & external economies of scale
internal = occur when firm becomes larger external = occur in the industry
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Marginal revenue
addition to total revenue resulting from the sale of one more unit
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normal & abnormal profit
normal = profit a firm must make to stay in business, whic is insufficient to attract new firms into the market TR=TC abnormal = profit over & above normal profit aka supernormal profit TR>TC
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technological change
Term used to describe the overall effect of invention, innovation & spread of tech in the economy
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Invention
creation of new ideas without it necessarily becoming commercial reality
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Innovation
transforming an invention into commercial reality
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creative destruction
new products/services revolutionises markets - destroys pre existing businesses - unemployment
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Other cards in this set
Card 2
Front
output per worker per period of time
Back
Productivity
Card 3
Front
Dividing the production process into different stages which enables workers to specialize in different tasks - increases overall efficiency & lowers AC of production
Back
Card 4
Front
business enterprise that produces/deals in/exchanges goods/services to earn revenue to cover production costs they incur
Back
Card 5
Front
SR = time period in which at least one FofP is fixed and cannot be varied - only way to increase production is to add more variable factors LR = Time period in which no FofP are fixed = can all be varied
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