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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

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