Production Flashcards
Production possibility frontiers
max possible output combination of 2 goods or services an economy can achieve when all resources are fully used
4 factors
Land (diamond and natural gases), Labour (engineers), Capital/Tech (tractors) and Enterprise (cleaning firms)
Absolute advantage
Able to produce more of something than another country
Comparative advantage
Able to produce something at a much lower opportunity cost than another country
Ceteris paribus
All other things being equal
Normative statements
Value based and involve opinions
Positive statements
Can be supported with evidence and facts
Why is specialisation labour good
- Becomes highly skilled
- Production rate increase
- Makes less mistakes
- Better sales
- Workers are more reliable
- Workers feel motivated
Problems specialisation labour creates
- Get bored
- Gap in skill if they leave
- Ask for wage increase
- Workers may go on strike
- Can’t get cover work
Country specialisation
When a country specialises its resources into producing a limited range of goods and services
Uks specialisation
- Tourism
- Mechanical power generators
- Retail
- Agriculture
- Manufacturing
- Education
- Financial services
Division of labour
Specialisation of labour (workers) into separate tasks (specialist) to insure higher productivity per worker
Productivity
Controlling inputs and maximising outputs
Producer surplus
Difference between amount the producer is willing to supply and the actual amount they receive
Dismissing marginal utility
More consumed satisfaction decreases
