Microeconomics definitions - production and productivity

    Cards (16)

    • Production
      A measure of the value of the output of goods and services
    • Productivity
      A measure of the efficiency of the factors of production
    • Specialisation
      When we concentrate on a product or task
    • Division of labour
      When production is broken down into many separate tasks
    • Fixed costs
      Costs that do not change as the level of output varies
    • Variable costs
      Costs that vary directly to the production or sale of a product
    • Marginal costs 

      Change in the total cost from a business producing one extra unit
    • Internal economies of scale 

      Occur from the expansion of the firm itself or efficiencies from a larger scale of production
    • External economies of sales 

      Involves changes outside the business
    • Agglomeration
      Businesses in a similar industry cluster together and attract an influx of skilled talent
    • Total revenue 

      All the money received by a firm from selling its total output
    • Average revenue
      Total revenue divided by output
    • Marginal revenue 

      Addition to the total revenue resulting from the sale of one more unit of product
    • Profit
      The difference between total sales revenue and total costs of production
    • Normal profit 

      The minimum profit a firm must make to stay in business
    • Supernormal profit 

      Profit which is over and above the normal profit