Economics B-Test 13th of November Flashcards
Definitions, Formulas, etc
What is Production?
Production is the process of creating something new, whether that be goods or services
Definition of Productivity
Productivity measures the amount of output that can be produced from a given amount of input.
Definition of Specialization
The selection of fields where your enterprise can achieve the best from the avainble money or capital, labour and other factors
Definition of Adding Value
The difference between the market price paid for a product by a consumer and the cost of the natural and man made materials, components etc.
Definition of Chain of Production Activity
Its the process of making products through these steps: 1. Raw Materials 2. Manufacturing 3. Assembly 4. Distribution
Definition of Supply Chain Management (SCM)
Supply chain management is controlling the creation of goods and services and includes every step needed to turn raw materials into finished products. The Chain will be finished when the consumer will get the final product.
Factor Productivity
Factor productivity is a measure of how efficiently inputs (like labor, machines, or materials) are used to produce goods and services. It shows how much output you get from input.
It’s about getting more output with the same or fewer resources.
Measuring Factor Productivity Formula
Productivity = Output ÷ Input
Average Revenue product of labour
Average Revenue product of labour = Total Revenue ÷ Number of Workers
How can firms increase factor productivity?
Firms can increase factor productivity by using resources more efficiently. This can be done by:
- Improving technology
- Training workers
- Optimizing processes
- Investing in better equipment
- Decreasing the input so they can produce cheaper, more valuable products
What is Labour Intensive Production?
Labour-intensive production relies heavily on workers to produce goods or services, like construction or in restaurants.
What is Capital Intensive Production?
Capital-intensive production uses machines and technology more than workers to produce goods, like in car factories or electronics.
Labour Intensive Production Benefits:
Sometimes only labour can achieve the production of certain goods, forexample the production of denture can only be done by a trained professional.
Labour Intensive Production Negatives:
Usually machines are more reliable to make quality products than humans,
Capital Intensive Production Benefits:
Machines work faster and more consistenly than humans.
