econ revision

Factors of Production

Inputs used to produce goods and services.

Land

Natural resources (oil, water, fields).

Labour

Human effort and skills.

Capital

Machinery, tools, equipment.

Enterprise

Entrepreneurs who organise the other factors and take risks.

Productivity

Output per worker or per hour.

Division of Labour

Workers specialise in one task, increasing productivity.

Business Costs

Costs consist of fixed (non-variable) and variable (change with output).

Revenue

Total revenue equals price multiplied by quantity sold.

Profit

Profit equals total revenue minus total cost.

Economies of Scale

Cost advantages from growing, such as bulk buying and better machinery.

Diseconomies of Scale

Costs rise when a business becomes too large, causing inefficiencies.

Competitive Markets

Markets with many buyers and sellers where firms are price takers.

Large Firms Advantages

Economies of scale, strong brand recognition, and more resources for R&D.

Large Firms Disadvantages

Diseconomies of scale and slower decision-making.

Small Firms Advantages

Flexibility and personal service in niche markets.

Small Firms Disadvantages

Higher costs and limited finances.

Monopoly

One firm dominates the market with over 25% share.

Oligopoly

A few firms dominate the market with potential for collusion.