Microeconomics A Level

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  • Created by: amyclaire
  • Created on: 09-10-17 18:12
Short term
At least 1 factor of production is fixed
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Long term
All factors of production are variable
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Marginal
One extra
3 of 21
Increasing returns to scale
The increase in output is more than proportional i.e. more than doubles
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Constant RTS
Increase in output is proportional
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Decreasing RTS
Increase in output less than proportional
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EOS
An increase in output leads to a reduction in average total costs for firms
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Average Revenue
TR/ output
8 of 21
Marginal Revenue
amount received from selling one extra unit of output
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Normal Profit
Min amount needed to keep a firm in current line of production
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Abnormal Profit
Made over an above normal profit
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Internal EOS
Long term growth of the firm
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External EOS
Occur within an industry not a firm, benefits most firms
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Invention
Creating a new product or process
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Innovation
Improving existing inventions into marketable products
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Productive efficiency
Centres on minimising average costs of production
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Dynamic efficiency
Occurs in the long run, whereby productive efficiency increases over time
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Creative destruction
Capitalism leads to a constantly changing structure of the economy, industrial transformation from competitive to monopolist market and back again etc.
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Marginal cost of Labour
Extra cost of hiring one extra worker
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Marginal Physical Product
Extra output produced by one extra worker
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Marginal Revenue Product of Labour
Change in total revenue from selling extra output produced by extra worker employed
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Other cards in this set

Card 2

Front

All factors of production are variable

Back

Long term

Card 3

Front

One extra

Back

Preview of the back of card 3

Card 4

Front

The increase in output is more than proportional i.e. more than doubles

Back

Preview of the back of card 4

Card 5

Front

Increase in output is proportional

Back

Preview of the back of card 5
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