Production, costs and revenue Flashcards
What is the productivity gap?
The difference between labour productivity in the Uk and other developed countries
What does an entrepenuer do?
They are the people who decide what to produce, how to produce and whom to produce for. They decide how much of the other factors of production to employ
Entrepreneur characteristics and motives?
They are financial risk-takers and decision-maker.
Profit is their reward for successful decision making
Define
-productivity
-labour productivity
-capital productivity
Productivity- output per unit of input
Labour productivity- output per worker per period of time
Capital productivity- output per unit of capital
What industry is labour productivity significant in?
In manufactoring industries
Nissan invested in a new factory in Sunderland in 1986 and produced 98 cars per worker but the rover car company only produced 33 per worker a year. the rover company couldn’t compete with Nissans prices and so went put out of business.
Their labour productivity was too low
What is the G7?
The G7 is an informal grouping of seven of the world’s advanced economies, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States
What is the productivity puzzle?
The uk has struggled to recover its labour productivity from the 2009 recession compared to other countries such as the US and Germany. By 2014 the Uk had still not managed to recover its labour productivity back to pre 2008 level
What are some explanations as to why we have the productivity puzzle?
- inadequate investment in new capital goods
- relatively low wages in the uk economy
- employers ‘hording’ rather than laying-off workers in the recession
What is labour hording and why was it so bad?
The UK’s flexible labour markets were very effective in delivering part time labour. However, underemployment (those who wants to work more hours but cannot) was very high.
When faced with collapsing markets, instead of reducing the number of people that worker, they tried to cut the wages and reduce the hours they worked
