2.3 Flashcards
define productivity
the output per unit per unit of time
what are the implications of higher productivity for firms and the economy
lower average cost of production – lower prices – increased demand – lower unemployment – higher GDP growth
How can a firm’s credit history determine how productive they can be
A good credit score increases the chance of getting a loan which can be used to invest in new tech to increase productivity
whta is capital intensive
when a firm has access to cheap credit to be used on machinery as its cheaper than labour
what is the formula for capacity utlisation
( actual level of output / maximum possible output ) x 100
What are the factors influencing productivity of machinery
age of machines
Quality of inputs
hours used vs down time
unforeseen events such as power cuts
what is the benefit to consumers if a firm operates at an increased productivity
The lower unit costs can be passed onto consumers at cheaper prices to also give them a competitive advantage
why may a firm operate under maximum capacity
A reduction in demand from consumers means therr is no need to produce ore units
how could operating at maximum capacity affect the quality of goods
operating at maximum output implies that its a rushed process and employees are demotivated thereby diminishing quality fo goods
give one benefit of under-utlilised capacity
firms can change level 0f output based the economic cycle ( e.g economic boom = more units demanded so more units supplied )
if a firm enters a new market, how would it affect capacity utilization
capacity utlisation would increase as
