Production, Productivity, specialisation and division of labour Flashcards
What are the four factors of prouction?
land, labour, enterprise and capital
What is the return on land?
rent
What is the return on labour?
wage
What is the return on enterprise?
profit
What is the return on capital?
interest
What is a capital good?
goods that are used to make consumer goods and services
Give examples of capital inputs?
fixed machinery, hardware, software, new factories or buildings
What are consumer goods and services?
goods or services which satisfy our needs and wants directly
What are the three types of consumer goods?
- consumer durables
- consumer non-durables
- consumer services
What are consumer dirables?
products that provide a steady flow of satisfaction / utility over their working life
What are consumer non-durables?
- products that are used up in the act of consumption
What is porduction?
conversion of factor inputs
What are the two types of productivity?
labour, capital productivity
What is labour productivity?
output per worker
total output / total number of workers
What is capital productivity?
output per unit of capital
What is factor productivity?
average output of all factors of production
What is production?
measure of the value of the output of goods and services
What is productivity?
a measure of the effeciency of factors of production
Give the equation for output of goods and services?
- factor inputs + factor productivity = output of goods and services
Why is productivity important?
major determinant of economic growth and of inflation
What factors affect labour productivity?
- degree of competition in a market / industry
- advances in production technology
- investments in apprenticeships
- quality of management
- specialisation within a business
- higher business investment
When does productive effeciency occur?
when an economy uses the minimum inputs to produce the maximum output at the lowest cost
Average total costs equation?
total cost / output
What is meant by the term opportunity cost?
the next best alternative forgone
What are the four ways to improve productivity>
- specialisation and division of labour
- better education and training
- improved motivation of workers
- technological advances
When does specialisation occur?
when economic units such as individuals, firms, regions or countires concentrate on producing specific goods or services
When does division of labour occur?
where the production is broken down into many seperate tasks
How does specialisation increase output ?
- greater understanding of the requirements of production
- each economic unit can specialise in what they are best at
- efficient use of time as there is no switching between takss
What are the three main advantages of specialisation?
- higher labour productivity and business profits
- specialisation creates surplus output that can then be traded internationaly
- lower prices, higher real incomes and GDP growth
What are the disadvantages of specialisation?
- repetitive work, can be demotivating, lower productivity
- workers may take less pride in work and quality suffers
- workers may choose to move to less boring jobs, high worker turnover
