Production Flashcards
What is production
A process whereby scarce inputs are combined and converted into final outputs
What is productivity
The amount of output produced in a given time period e.g output per worker per hour
What are the 3 industrial sectors referred to as
- Primary = extraction
- Secondary = manufacturing
- Tertiary = services
In the uk there has been an increase in the number of tertiary jobs however there has also been a decrease is primary and secondary jobs what are the advantages, disadvantages of this
+ better quality of life as we have less unpleasant jobs
+ we’ve become more specialised
- not as self-sufficient as we rely on imported goods
When does productive efficiency occur
It occurs when all resources are full employed and it isn’t possible to produce any more of one goof without producing less of another. (Any point on a PPF is productively efficient )
It’s also said to occur when production takes place at the lowest average cost per unit.
What does it mean for price if a firm is productively efficient and is producing at its lowest average cost
The price will possibly be lower then inefficient firms as it has a lower average cost so sales will increase compared to competitors.
What is specialisation
The production of a limited range of goods by an individual,firm or county, in cooperation with others so that together a complete range of goods and services are produced
In order for specialisation to work what does there need to be
An efficient means of exchanging good and services such as money. For a market exchange economy you need money.
Why dose bartering/ exchange of goods not work
It relies on a double coincidence of wants
What are the benefits of specialisation
-increased range of goods and services
-it drives down costs and therefore price decreases
-these both lead to an improved standard of living and quality of life
What are the draw backs of specialisation
-interdependence
-countries become reliant on importing goods
-can lead to unemployment when patterns changes
What is dividing tasks between individuals known as
The division of labour
Why does the division of labour give rise to such enormous increases in labour productivity
- Workers get good at their jobs and improve and feel valued
- Production increases as they are getting better and quicker at what they do. Therefore productivity increases.
- Splitting the production into production lines saves time
- Cost effective capital for workers as the workers will be using that one piece of equipment all the time as they only do one task with also reduces training costs
- Consumers benefit as prices are lower because cost of production has decreased as productivity has increased
What are the limitations of the division of labour
-it can lead to boredom so workers feel de-valued as they aren’t learning new skill or being promoted, this could mean that quality suffers
-it can lead to increased worker alienation
-if workers become unemployed they don’t have many skills to help them find a new job
When does allocative efficiency occur
When the goods and services that are produced are the goods and services that consumers wish to buy (when demand = supply)
