Economics - Producers
Economics terms and definitions, producers
Terms
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- Labour intensive
- Amount of human resources are largecompared to capital resources. eg: picking fruit, retail, restaurants
- Secondary Sector
- Industries engaged in processing raw materials into finished (or semi finished) goods.
- Outputs
- Goods and services created through the production process
- Sole traders
- Simplest form of business unit, owned by one person who enjoys all decisions and profits. Unlimited liability
- Private Sector
- Section of the economy not owned by the govt.
- firms
- Businesses that provide a goods or service for sonsumers or other firms
- Revenue
- price x quantity sold - how much a firm earns from selling its goods/services
- Non-renewable resources
- Natural resources that cannot be replaced in reasonable time frame; example: oil, coal, natural gas
- capital resources
- Man made resources that help in the production of other goods and services
- Merger
- When two businesses agree to join their operations and become one single operation
- company
- Private and public. Access to large amounts of capital through share issues. Owners are called shareholders; profits paid out as dividends. Limited liability.
- Consumer cooperative
- A marketing organisation which the consumer onws, and share the profist in proportion to their purchases from the cooperative
- Service industries
- Business and firms in the transport, finance, accounting, communication and marketing industries
- State Owned Enterprise
- A business owned by the government e.g. NZ Post, TVNZ
- Satisficing
- Where firms are content with a less than maximum level of achivement
- Sales maximisations
- A major goal of firms - higher market share to gain market power and limit competition
- Merit goods
- Goods that the govt. deems benefical for people to consume
- consumer goods
- Goods purchased by households
- Diseconomies of scale
- Increasing output beyond the technical optimum results in inefficient use of resources and rising average costs of production.
- Specialisation
- Occurs when a worker, firm, region or country concentrates on what they do best.
- communication services examples
- Telephones, email, fax post, courior. Print media:newspaper and magazines Electonic media: radio, tv and internet
- Horizontal integration
- Two firms in the same industry at the same stage of production process combine to firm a larger business, ie: both firms do the same sort of thing
- Productivity
- Output relative to factor inputs
- Public sector
- Activites that are owned and controlled by govt.
- Producer Co-Operative
- Business owned by the suppliers of the firms raw materials. Eg. Cooperative dairy companies such as Fonterra
- Profit maximisation
- The goal of most business firms. Profits can be maximised by increasing revenue and minimising costs
- Public(collective) goods
- Goods and services that are provided by the central/local govt. free of charge and funded from taxation/rates
- Natural resources
- Provided by nature; example: rivers, air, trees, climate, seas
- Inputs
- Resources used in the production process
- Takeover
- Where a firm buys a controlling interest in another firm
- Management economies
- The ability to divide the labour force and create specialist positions as the labour force grows. Less mistakes are made now.
- Investment
- The production/purchase of capital goods to be used in the production process
- human resources
- The work and effort of people. Seperated into labout and entrepreneurship.
- Producers
- Those involved in the output of goods + services
- Industry
- Group of firms that manufacture a particular good or service e.g. publishing industry - firms who produce newspapers
- central government
- Parliament and many organisations such as government departments, ministries and state owned enterprises
- Technology
- The type of capital goods availabe to workers and the production process.
- capital intensive
- Amount of capital resources are large compared with the human resources.e.g. hydroelectricity, car production
- Economies of scale
- Witha proportionate increase in factor inputs and a more efficient use of resources the firm is able to lower average costs of production.
- Primary sector
- Industries concerned with intial use of natural resource, which they extract to produce raw materials
- financial economies
- The ability to decrease interest rates by having a larger loan and thus decreasing a banks timer per dollar.
- division of labour
- Specialisation of workers in particular activities within a production process. Should produce greater output with fewer mistakes as workers become experts in their jobs and lower average costs.
- limited liability
- The business is responsible for its own debts and the owners (shareholders) are able to keep their personal assests if the business fails.
- entrepreneur
- People who organise the factors of production and take business risks to earn profits
- Marketing services examples
- Market Research: Which products customers want, where to locate and what price that will maximise profits
- Demerit goods
- Goods and services the governement considers harmful for us and tries to discourage their production or consumption
- Marketing economies
- The ability to spread the costs of advertising and other marketing activites over larger output and thus decreasing cost per unit
- Decentralised management structure
- Decision making is delegated to other managers. The general manager/owner is more concerned with the overall performance and goal of the business. More common with companies.
- diversification
- When a firm takes over another firm in an unrelated industry. They do this to spread the risk of business failure.
- Renewable resources
- Natural resources that regenerate in a reasonable time frame
- Tertiary sector
- Industries concerned with the provision of services to consumers
- accounting services examples
- Profit (revenue-expenses) Financial stability - can the business pay its debt? Tax income and GST
- intermediate goods
- Components or parts that are inputs into the production process for a final product
- Partnership
- People combine money and/or skills; Risk responsibility and profits are shared; Specialists can be created/employed; 2-25 owners, unlimited liability
- centralised management structure
- The flatter the structure, the more control the general manager or owner has over decision making. Most common with sole traders and partnerships
- Production
- The process that combines resources (inputs) to make goods and services (outputs)
- Profit
- Excess revenue minus costs; The return to enterprise and risk taking
- Interdependence
- A two way reliance in which BOTH parties need each other i.e. mutual reliance