Micro Chapter 9 Factors of Production

Question 1

What are the factors of production ?

Answer 1

1. Land
2. Labour
3. Capital
4. entrepreneurship

Question 2

What is the formula for labour supply ?

Answer 2

no. of workers x number of working hours per worker

Question 3

What is the formula for average labour productivity ?

Answer 3

Total output / Total number of working hours

Question 4

What are the advantages of paying the wage by piece rate ?
( to the employers )

Answer 4

1. It raises the workers’ incentive to work and their productivity
2. Cost of supervising workers is lower

Question 5

What is the disadvantages of paying the wage by piece rate ?
( to the employers )

Answer 5

The employers have to bear extra cost in quality control

Question 6

What is the advantages of paying the wage by piece rate ?
( to the employees )

Answer 6

Workers can earn more by working harder.

Question 7

What is the disadvantages of paying the wage by piece rate ?
( to the employees )

Answer 7

The income will be unstable

Question 8

What is the advantages of paying the wage by time rate ?
( to the employers )

Answer 8

1. The cost of measuring workers’ output is lower
2. The cost of monitoring output quality is lower
3. It is easier to maintain a static team

Question 9

What is the disadvantages of paying the wage by time rate ?
( to the employers )

Answer 9

1. The working incentive of workers will be lower
2. Cost of supervising workers’ performance will be higher

Question 10

What is the advantages of paying the wage by time rate ?
( to the employees )

Answer 10

Workers can earn a more stable income

Question 11

What is the disadvantages of paying the wage by time rate ?
( to the employees )

Answer 11

Workers cannot earn more by working harder

Question 12

What is the advantages of paying the wage by basic salary plus commission ?
( to the employers )

Answer 12

1. Raises workers’ incentive to work
2. Cost of supervising workers is lower
3. Risk of operation can be shared with employees

Question 13

What is the disadvantages of paying the wage by basic salary plus commission ?
( to the employers )

Answer 13

Cost of assessing workers’ performance and measuring workers’ output is higher

Question 14

What is the advantages of paying the wage by basic salary plus commission ?
( to the employees )

Answer 14

1. Workers can earn a regular income
2. Workers can earn more by working more

Question 15

What is the disadvantages of paying the wage by basic salary plus commission ?
( to the employees )

Answer 15

Income is less stable as it depends on workers’ performance

Question 16

What is the advantages of paying the wage by profit-sharing scheme ?
( to the employers )

Answer 16

1. Raise workers’ incentive to work
2. Cost of supervising workers is lower
3. Part of the business risk can be shifted to workers

Question 17

What is the disadvantages of paying the wage by profit-sharing scheme ?
( to the employers )

Answer 17

1. Cost of calculating the wage payment is higher
2. More difficult to recruiting workers because it does not provide any basic salary

Question 18

What is the advantages of paying the wage by profit-sharing scheme ?
( to the employees )

Answer 18

Workers can earn more by working harder

Question 19

What is the disadvantages of paying the wage by profit-sharing scheme ?
( to the employees )

Answer 19

Workers have to bear risk as their incomes fluctuate with the firm’s profit

Question 20

What is the advantages of paying the wage by tips.
(to the employers)

Answer 20

1. Workers have a strong working incentive serve their customers
2. Cost of supervising workers is lower
3. Part of the business risk can be shifted to the workers.

Question 21

What is the disadvantage of paying the wage by tips.
(to the employers)

Answer 21

It is more costly to calculate the wage payment.

Question 22

What is the advantage of paying the wage by tips.
(to the employees)

Answer 22

Workers can earn more by working harder

Question 23

What is the disadvantages of paying the wage by tips.
(to the employees)

Answer 23

Workers bear risk as their becomes fluctuate with tips which are uncertain.