lesson 14 Flashcards
what is productivity?
the output per unit of input (what we get out from what we put in)
productivity is a measure of…
efficiency
chain for investing in high tech factories
- investing in more high tech factories
- more machinery
- workers are more productive
- high productivity means low costs
- low costs mean low prices
- low prices mean increase in competition
what is specialisation?
specialisation is the process where workers, firms, regions or even countries concentrate on a particular product or task
benefits of specialisation
- people are able to focus their energy in one direction making them very good at it so increasing productive efficiency
-they are able to gain an advantage on the competition so they are able to succeed in the local, national or global market place
- can use the resources available to you
- can use your expertise to improve quality
- can be more competitive
- can improve productivity
- can concentrate on what you are best at
what is the division of labour?
the breaking down of a manufacturing process into separate tasks
who identified the division of labour as a fundamental problem and in what influential book?
adam smith
the wealth of nations
if a firm functions with more capital intensively what does that mean?
more machinery
advantages of the division of labour?
- output per worker can be improved
- no time is wasted moving from job to job
- saves training times and costs
- each worker requires les equipment
- machinery can be developed for each individual task
- workers become very efficient
disadvantages of the division of labour
- savings brought about by improved productivity may lead to costs elsewhere (eg recruitment)
- bored staff may leave
- loss of flexibility (if a specialist leaves who’s going to do their job and as well as they do it as well ygm)
- lack of job satisfaction and therefore motivational problems
- unemployment risks as if you are too specialised its going to be very difficult to change to another
-workers become bored due to its monotony
when is specialisation possible?
its only possible because we used money to trade as its a medium of exchange
domestic trade
products exchanged within country
international trade
products exchanged across international borders
risks of specialisation for a country
- all eggs are in one basket
- changes in taste can reduce demand
- natural disasters may disrupt output
- the competition may produce more cheaply than you
- may be difficult to specialise in new areas
three types of efficiency
- productive
- allocative
- dynamic
what is allocative efficiency?
giving people what they want
what is dynamic efficiency?
when all resources are allocated efficiently over time, and the rate of innovation is at the optimum level, which leads to falling long run average costs
producing the largest number of products and services based on the resources available. utilisation
