2.3 Productive Efficiency

Question 1

Define productivity

Answer 1

Output per unit of input per period of time

Question 2

What is labour productivity

Answer 2

Measure of output per worker per hour

Question 3

What factors influence productivity

Answer 3

-Training workers
-More advanced capital machines
-Investment in health and education
-Innovation

Question 4

Link productivity and competitiveness

Answer 4

If a business lowers their average cost by better productivity, they can charge lower price and then be more competitive

Question 5

What is capacity utilisation

Answer 5

The extent to which the productive capacity of the business is being used

Question 6

Problems of over capacity utilisation

Answer 6

-Quality affected-rushed
-Employees demotivated-stress
-Can’t respond to change in demand quick

Question 7

Problems of under capacity utilisation

Answer 7

-Fixed costs not utilised
-Less competitive

Question 8

What are the impacts (2) on average costs decreasing

Answer 8

-Higher profits-invest more-improve efficiency
-Lower price-more competitive

Question 9

One impact of minimising waste

Answer 9

Brand loyalty (From being ethical) and improve quality can lead to price inelastic

Question 10

What is lead time

Answer 10

The time delay between a decision being made and being carried out