production efficiency

Question 1

how do you look at how efficiently a business operates?

Answer 1

look at productivity

Question 2

what does productivity measure?

Answer 2

relationship between inputs into the production process and the resultant outputs

Question 3

how do u measure unit costs?

Answer 3

total costs
—————
total output

Question 4

what would a falling ratio of unit cost measure mean?

Answer 4

mean that efficiency is improving

Question 5

4 ways to measure productivity?

Answer 5

-output per worker or hour of labour
-output per hour / day / week
-output per machine
-unit costs

Question 6

why is achieving a high productivity good?

Answer 6

• a more efficient business will produce lower cost goods than competitors. That means the business can either make a higher profit per unit sold
• investing in production assets is expensive

Question 7

5 ways a business can improve productivity?

Answer 7

-Training
-Improved motivation
-More or better capital equipment
-better quality raw materials
-improved organisation of production