Economics Theme 2.3.4

Question 1

What is productive efficency

Answer 1

Productive efficiency occurs where no additional (or maximum) output can be produced from the factor inputs available at the lowest possible average or unit cost

Question 2

What are average total costs

Answer 2

Average total cost = total cost/output

Question 3

How does productive inefficency occur

Answer 3

Through diseconomies of scale we can see that productive inefficiency is created where resources are misallocated:
Lack of communication between employees
Lack of coordination by management
Bureaucracy, particularly in large organisations

Question 4

How does productive efficency occur

Answer 4

Through economies of scale we can see that productive efficiency is created when:
Purchasing economies lead to a reduction in costs
Specialisation can lead to a more efficient use of inputs
Better management can lead to increased output with the same factor inputs

Question 5

What is time based management

Answer 5

Time Based Management is the effective management of resources to ensure that unproductive time is eliminated from the production process
This will involve the use of a variety of operations management systems including Just In Time and CAD/CAM

Question 6

what are the advantages of short lead times

Answer 6

Reduced lead times and faster response to changes in the market meaning short product development lead times
Less wastage through increased efficiency
Faster development time for new products