Micro Chapter 9 Factors of Production Flashcards
What are the factors of production ?
- Land
- Labour
- Capital
- entrepreneurship
What is the formula for labour supply ?
no. of workers x number of working hours per worker
What is the formula for average labour productivity ?
Total output / Total number of working hours
What are the advantages of paying the wage by piece rate ?
( to the employers )
- It raises the workers’ incentive to work and their productivity
- Cost of supervising workers is lower
What is the disadvantages of paying the wage by piece rate ?
( to the employers )
The employers have to bear extra cost in quality control
What is the advantages of paying the wage by piece rate ?
( to the employees )
Workers can earn more by working harder.
What is the disadvantages of paying the wage by piece rate ?
( to the employees )
The income will be unstable
What is the advantages of paying the wage by time rate ?
( to the employers )
- The cost of measuring workers’ output is lower
- The cost of monitoring output quality is lower
- It is easier to maintain a static team
What is the disadvantages of paying the wage by time rate ?
( to the employers )
- The working incentive of workers will be lower
- Cost of supervising workers’ performance will be higher
What is the advantages of paying the wage by time rate ?
( to the employees )
Workers can earn a more stable income
What is the disadvantages of paying the wage by time rate ?
( to the employees )
Workers cannot earn more by working harder
What is the advantages of paying the wage by basic salary plus commission ?
( to the employers )
- Raises workers’ incentive to work
- Cost of supervising workers is lower
- Risk of operation can be shared with employees
What is the disadvantages of paying the wage by basic salary plus commission ?
( to the employers )
Cost of assessing workers’ performance and measuring workers’ output is higher
What is the advantages of paying the wage by basic salary plus commission ?
( to the employees )
- Workers can earn a regular income
- Workers can earn more by working more
What is the disadvantages of paying the wage by basic salary plus commission ?
( to the employees )
Income is less stable as it depends on workers’ performance
What is the advantages of paying the wage by profit-sharing scheme ?
( to the employers )
- Raise workers’ incentive to work
- Cost of supervising workers is lower
- Part of the business risk can be shifted to workers
What is the disadvantages of paying the wage by profit-sharing scheme ?
( to the employers )
- Cost of calculating the wage payment is higher
- More difficult to recruiting workers because it does not provide any basic salary
What is the advantages of paying the wage by profit-sharing scheme ?
( to the employees )
Workers can earn more by working harder
What is the disadvantages of paying the wage by profit-sharing scheme ?
( to the employees )
Workers have to bear risk as their incomes fluctuate with the firm’s profit
What is the advantages of paying the wage by tips.
(to the employers)
- Workers have a strong working incentive serve their customers
- Cost of supervising workers is lower
- Part of the business risk can be shifted to the workers.
What is the disadvantage of paying the wage by tips.
(to the employers)
It is more costly to calculate the wage payment.
What is the advantage of paying the wage by tips.
(to the employees)
Workers can earn more by working harder
What is the disadvantages of paying the wage by tips.
(to the employees)
Workers bear risk as their becomes fluctuate with tips which are uncertain.
