Language practice

I. Match the words to their definitions.

a) cost	1) ability gained through practice
b) output	2) the amount paid or charged for a purchase
c) loss	3) a business or service that acts for others
d) labour	4) production or yield during a given time
e) specialist	5) someone or something that is lost
f) agency	6) physical or manual work done for hire
g) discount	7) the regular way of doing something
h) skill	8) a reduction of the standard price
i) method	9) a person who devotes his practice to one particular field

II. Complete the sentences below using the information of the text.

1. Costs which do not change as output changes are called … costs. 2. Costs which have both a fixed and a variable element are called … costs. 3. The difference between the selling price and the variable cost of a product is called a product’s unit … . 4. The number of units that must be made and sold to cover total fixed costs is called the product’s break-even … . 5. Three main production methods are job, … and mass production. 6. Job production typically requires skilled … . 7. Mass production is the form most closely associated with … of scale. 8. Efficient … can be employed who bring greater expertise into the firm. 9. Larger firms are better able to support … and development. 10. Doubling the size of something does not usually double its … .

III. Say whether these statements are true or false, and if they are false say why.

1. Fixed costs change as output changes. 2. Examples of variable costs include factory rent and office workers’ salaries. 3. In practice, many costs are semi-variable, having both a fixed and a variable element. 4. The product’s break-even point is the number of units that must be made and sold to cover total fixed costs. 5. Another way to explain the break-even point is as the point at which the firm makes profit or loss. 6. The way that firms are organized to make their products is the same. 7. Job production means making a unique product. 8. Batch production means that large numbers of an identical product are made. 9. The way production is organized influences the factory layout, the skills needed by employees and how capital-intensive or labour-intensive production will be. 10. Mass production typically requires skilled labour, whereas job production often involves a more capital-intensive approach to manufacture. 11. Batch production is the form most closely associated with economies of scale. 12. Greater production means lower total costs.

IV. Answer the following questions.

1. How can production costs be divided? 2. What do you know about fixed and variable costs? 3. What example of semi-variable costs can you give? 4. To whom is this distinction important? 5. What is it: a product’s unit contribution? 6. In what cases the firm’s fixed costs are paid? 7. What is another way to explain the break-even point? 8. How can you explain the product’s margin of safety? 9. How many main manufacturing methods are there? 10. What are these main manufacturing methods? 11. What is the difference between batch and mass production? 12. What does greater production mean? 13. What do the main economies of scale include?