Labour Productivity (Quick Revision)

Question 1

Define: Labour Productivity

Answer 1

Labour Productivity is the output per worker

Question 2

If labour productivity increases, output must also increase. True or false? Explain.

Answer 2

False; with fewer workers the output per worker may be higher, but the total output may be the same or even lower.

Question 3

An increase in labour productivity must lead to an increase in sales. True or false? Explain.

Answer 3

False; the firm may produce output but not be able to sell it.

Question 4

State three ways of increasing labour productivity.

Answer 4

• Training
• Improved working practices
• Better technology

Question 5

State two benefits of higher labour productivity.

Answer 5

• May reduce the labour costs per unit

* May increase output

Question 6

What is the Examiner’s note for Labour Productivity?

Answer 6

Employees may resist attempts to increase productivity if they think it will lead to redundancies - if individuals produce more, a firm may be able to lose some of them.

Question 7

What is the Evaluation point for Labour Productivity?

Answer 7

Efforts to increase productivity are likely to be more successful if:

• Employees see the need
• If they are involved in changes
• If jobs are not lost

And…

• If they gain extra rewards as a result