Production, costs and growth
| English | 中文 | Pinyin |
|---|---|---|
| productivity/ˌprɒdəkˈtɪvɪti/ | 生产率 | shēng chǎn lǜ |
| profit/ˈprɒfɪt/ | 利润 | lì rùn |
A decision you can investigate
- Two bakeries make the same bread, but one trains each worker for a specialist task.
- Higher output per worker can lower cost, while repetitive work can harm motivation.
Build the explanation
- Productivity 生产率 is output per unit of input. Division of labour splits production into specialised tasks.
- Fixed costs do not change with output in the relevant period; variable costs do. Total cost is their sum.
Match the terms to their precise meanings.
Use these definitions in the particular context of Production, costs and growth.
Work through the evidence
- A bakery has fixed costs of 200 yuan and variable cost of 3 yuan per loaf. At 100 loaves, total cost = 200 + 3 × 100 = 500 yuan.
- At 8 yuan per loaf, revenue = 8 × 100 = 800 yuan and profit 利润 = 800 − 500 = 300 yuan.
What is average total cost at 100 loaves?
A bakery has fixed costs of 200 yuan and variable cost of 3 yuan per loaf. At 100 loaves, total cost = 200 + 3 × 100 = 500 yuan. At 8 yuan per loaf, revenue = 8 × 100 = 800 yuan and profit = 800 − 500 = 300 yuan.
Which caution belongs to this particular task?
Economies of scale lower long-run average cost as scale increases; they are not simply a higher total profit. Coordination problems and slow communication can cause diseconomies in a large business.
The explanation in this lesson makes a conditional claim; relevant context and evidence still matter.
Coordination problems and slow communication can cause diseconomies in a large business.
Test the limits
- Economies of scale lower long-run average cost as scale increases; they are not simply a higher total profit.
- Coordination problems and slow communication can cause diseconomies in a large business.
Choose the two statements supported by this lesson.
The concept and worked evidence support these claims; the stated limits rule out the universal shortcut.
Apply and explain your answer
- What is average total cost at 100 loaves?
- 5 yuan per loaf.
Use the terms precisely
- productivity: Output per unit of input.
- profit: Total revenue minus total cost.
A bakery has fixed costs of 200 yuan and variable cost of 3 yuan per loaf. At 100 loaves, total cost = 200 + 3 × 100 = 500 yuan. At 8 yuan per loaf, revenue = 8 × 100 = 800 yuan and profit = 800 − 500 = 300 yuan.
Economies of scale lower long-run average cost as scale increases; they are not simply a higher total profit. Coordination problems and slow communication can cause diseconomies in a large business.
Productivity is output per unit of input. Division of labour splits production into specialised tasks.