3.4.1 - Production Flashcards
What is production?
Converts inputs or factor services into outputs.
What are the factors of production?
The inputs into the production process.
What is the productivity gap?
The difference between labour productivity, e.g. in the UK between other developed economies.
Why are entrepreneurs different from the other factors of production?
They decide how much of the other factors of production to employ.
What is productivity?
The output per unit of input.
What is labour productivity?
Output per worker.
What is capital productivity?
Output per unit of capital.
Where is labour productivity massively important?
The car industry.
Why did the Rover Car Group go bankrupt?
Nissan had invested in a state-of-the-art new facility, with an ability to produce 98 cars per worker per year. This was far higher than the 33 cars per worker per year of Rover.
What caused labour productivity around the globe to fall?
2009 recession.
Why does the UK have such low productivity compared to other nations such as Germany or the USA?
Inadequate investment in new capital goods.
Relatively low wages in the UK economy.
Employers ‘hoarded’ workers during the 2009 recession.
Why did companies refuse to fire workers during the 2009 recession?
They thought it would be tough to re-recruit following the economic upturn.
What are the companies that have been blamed for the low productivity?
‘Zombie’ firms.
An underperforming firm, with low labour productivity that generates just enough income to enable interest to be paid on its debts.
What are the two things that could happen due to the country having such low productivity?
Reduce labour costs per hour by cutting hourly pay.
A metaphorical ‘race to the bottom’ to push UK workers to match the lowest competing wages elsewhere in the world.
Invest in newer and more efficient equipment and improve infrastructure.
What is a firm?
A productive organisation which sells its output of goods commercially.
