2.3.1 Productivity

Question 2

Define productivity

Answer 2

Output per unit of input (e.g. worker) per period of time (e.g. hour).

Question 3

What does being more productive mean

Answer 3

The same input, such as the number of workers, produces more output, over the same period of time.

Question 4

What is productivity most commonly measured with

Answer 4

Labour productivity

Question 5

What is labour productivity

Answer 5

1. A measure of output per worker per hour.
2. It is equivalent to how much real GDP is produced per unit of labour per hour.

Question 6

Consequences of an increase in productivity is

Answer 6

A lower average cost

Question 7

Higher levels of productivity also result in higher rates of economic growth, this meant

Answer 7

since the rate of production in the economy increases, and as a result, GDP increases.

Question 8

What is GDP ( Gross Domestic Product)

Answer 8

It’s just a way to measure how much money a country makes by adding up the value of everything it produces in a year.

Question 9

Factors influencing the increase productivity ( there’s 4 on here)

Answer 9

1. training workers/ using more advanced capital machinery.
2. Larger quantities of capital stock
3. Changes in the level of investment
4. Innovation

Question 10

How does Training workers/ using more advanced capital machinery increase productivity

Answer 10

As larger quantities could be produced

Question 11

How does Larger quantities of capital stock increase productivity

Answer 11

More capital stock = better tools + more machines → workers can do more in less time → higher productivity.

Question 12

How does Changes in the level of investment increase productivity

Answer 12

If a firm has easy access to credit, they are more able to make investments and therefore improve their long term productivity.

Question 13

How does innovation increase productivity

Answer 13

Innovation helps people and businesses do things better, faster, or cheaper — which means more gets done in less time = higher productivity.

Question 14

Competitiveness & Productivity

Answer 14

The more productive a firm is the lower they can afford their prices to be as they are more efficient

Question 15

When does labour intensive production occur

Answer 15

Occurs when there is a large supply of skilled and relatively low cost (compared to capital) labour.

• Costs tend to be more variable, so there is a lower breakeven point of output.

Question 16

When does Capital intensive production occur

Answer 16

When firms can access relative cheap, long term finance and when capital is relatively cheap compared to labour.

• Costs tend to be fixed, so the breakeven output is higher.