Economics: Topic 3, Year 1 Definitions

Measures the efficiency with which inputs are transformed into outputs.

A measure of the efficiency of Labour

Occurs when an individual, firm, region or country concentrates on producing a limited range of products.

Refers to specialisation by individual workers. It involves breaking down production into many different tasks, with each worker specialising in one task.

The income generated for a firm by the operations of one of its smaller components or divisons.

Anything that is widely accepted in exchange for goods and services.

The trading of goods and services between sellers and buyers.

The time period in which it is possible to change the levels of input of all of the factors of production.

The time period in which it is only possible to change the level of input of variable factors of production.

Costs that do not vary directly with output in the short run.

Costs that do vary directly with output in the short run.

The sum of fixed costs and variable costs.

The total costs divided by the number of units produced.

Shows how the average costs of production change as output changes in the long run.

Shows how the average costs of production change as output changes in the short run.

The advantages that an organisation gains due to an increase in its size. These advantages cause an increase in productive efficiency and thus a decrease in the average costs of production.

The advantages that an organisation gains due to a growth in the size of the industry within which it operates.

The disadvantages that an organisation experiences due to an increase in size. These cause a decrease in productive efficiency and thus an increase in the average costs of production.

The disadvantages that an organisation experiences due to growth in the size of the industry within which it operates.

The average receipt of money for each good or service that is sold.

The total money received from the sale of a firm's goods and services. Total revenue can also refer to the total money received from the sale of a particular good or service.

The difference between the total revenue of a firm and its total costs.

Making the highest possible level of profit.