Economics: Production and Productivity

This set of flashcards covers key concepts related to production and productivity in economics, aimed at helping students understand the terminology and principles discussed in their lecture.

Production

The process of converting inputs (raw materials and labor) into outputs (goods and services).

Inputs

The resources used to produce goods and services, which can be tangible (e.g., raw materials, capital) or intangible.

Outputs

The final products or services produced by a business.

Productivity

A measure of efficiency that calculates the output per unit of input employed.

Labour Productivity

The amount of output produced per worker per hour worked.

Specialisation

The concentration of production on a narrow range of goods and services to increase efficiency.

Division of Labour

The breakdown of production processes into separate tasks, allowing each worker to specialize in what they do best.

Economies of Scale

Cost advantages that a business obtains due to the scale of operation, with cost per unit of output generally decreasing as scale increases.

Barter System

A system of exchange where goods and services are traded directly for other goods and services without the use of money.

Economic Profit

The amount of profit remaining after all costs, including opportunity costs, have been deducted from total revenue.

Normal Profit

The minimum level of profit necessary for a company to remain competitive in the market.

Supernormal Profit

Profit that exceeds the normal profit and provides incentive for other firms to enter the industry.

Investment

The act of allocating resources, usually money, in order to generate income or profit.

Motivation

The factors that influence an employee's willingness to perform in their job and enhance productivity.

Innovation

The introduction of new ideas, products, or methods to improve efficiency and effectiveness in business.

Managerial Economies of Scale

Cost savings that result from the employment of specialized managers and improved organizational structure.

De-industrialisation

The process by which industrial activity in a region or economy is reduced, often leading to the decline of traditional industries.

Opportunity Cost

The potential benefit lost when one alternative is chosen over another.

Long Run Average Cost Curve (LRAC)

A curve showing the lowest average cost of production at which a given level of output can be produced over a time period when all inputs can be varied.