lesson 14

Question 1

what is productivity?

Answer 1

the output per unit of input (what we get out from what we put in)

Question 2

productivity is a measure of…

Answer 2

efficiency

Question 3

chain for investing in high tech factories

Answer 3

1. investing in more high tech factories
2. more machinery
3. workers are more productive
4. high productivity means low costs
5. low costs mean low prices
6. low prices mean increase in competition

Question 4

what is specialisation?

Answer 4

specialisation is the process where workers, firms, regions or even countries concentrate on a particular product or task

Question 5

benefits of specialisation

Answer 5

• people are able to focus their energy in one direction making them very good at it so increasing productive efficiency

-they are able to gain an advantage on the competition so they are able to succeed in the local, national or global market place

• can use the resources available to you
• can use your expertise to improve quality
• can be more competitive
• can improve productivity
• can concentrate on what you are best at

Question 6

what is the division of labour?

Answer 6

the breaking down of a manufacturing process into separate tasks

Question 7

who identified the division of labour as a fundamental problem and in what influential book?

Answer 7

adam smith
the wealth of nations

Question 8

if a firm functions with more capital intensively what does that mean?

Answer 8

more machinery

Question 9

advantages of the division of labour?

Answer 9

• output per worker can be improved
• no time is wasted moving from job to job
• saves training times and costs
• each worker requires les equipment
• machinery can be developed for each individual task
• workers become very efficient

Question 10

disadvantages of the division of labour

Answer 10

• savings brought about by improved productivity may lead to costs elsewhere (eg recruitment)
• bored staff may leave
• loss of flexibility (if a specialist leaves who’s going to do their job and as well as they do it as well ygm)
• lack of job satisfaction and therefore motivational problems
• unemployment risks as if you are too specialised its going to be very difficult to change to another

-workers become bored due to its monotony

Question 11

when is specialisation possible?

Answer 11

its only possible because we used money to trade as its a medium of exchange

Question 12

domestic trade

Answer 12

products exchanged within country

Question 13

international trade

Answer 13

products exchanged across international borders

Question 14

risks of specialisation for a country

Answer 14

• all eggs are in one basket
• changes in taste can reduce demand
• natural disasters may disrupt output
• the competition may produce more cheaply than you
• may be difficult to specialise in new areas

Question 15

three types of efficiency

Answer 15

• productive
• allocative
• dynamic

Question 16

what is allocative efficiency?

Answer 16

giving people what they want

Question 17

what is dynamic efficiency?

Answer 17

when all resources are allocated efficiently over time, and the rate of innovation is at the optimum level, which leads to falling long run average costs

Answer 18

producing the largest number of products and services based on the resources available. utilisation