2.3.1 productivity Flashcards
What is productivity defined as?
Output per unit of input per period of time.
What does it mean to be more productive?
Means the same input, same number of workers, produces more output, over the same period of time.
What does being more productive do?
Lowers average cost per unit.
How is productivity most commonly measured?
With labour productivity, which is a measure of output per worker per hour.
It is equivalent to how much real GDP is produced per unity of labour per hour, which can be used as a measure to compare the efficiency of countries on an international level.
How does increased productivity lead to improvements in standard of living?
Average costs of production are lowered, which results in lower prices and therefore increases demand in the economy and can result in higher levels of employment. Businesses may earn higher profits and be able to afford to pay higher wages.
How can productivity be increased? [6]
- By training workers
- Using more advanced capital machinery
- Larger quantities of capital stock
- Innovation in productive process
- Changes in level of investment
- Technological innovation
How can productivity of employers be improved?
Through investment in education, training and health.
How can changes in level of investment affect how productive a firm is?
If they have easy access to credit, they are able to make investments and improve long term productivity.
How can productivity increase by innovation in the process of production?
Since there will be an increase in allocative efficiency.
How does productivity link to competitiveness?
It is directly linked to how competitive a business is as it influences the cost of producing each unit of output.
What is labour intense production?
Relies mainly on labour, and occurs when there is a large supply of skilled and relatively low cost labour.
Why does labour intensive production often have a lower breakeven point?
As costs involved tend to be more variable.
When does capital intensive production usually occur?
When firms can access relative cheap, long term finance and when capital is relatively cheap compared to labour.
What are examples of labour intensive production?
Services, such as hairdressing and hotels, and farming and mining.
What are some examples of capital intensive production?
The transport and manufacturing industries as production relies on machinery.
