Production Ch9

Question 1

Production

Answer 1

The process of turning resources into goods or services

Question 2

Consumer goods

Answer 2

Satisfy consumers wants directly

Question 3

Capital goods/ producer goods

Answer 3

Producing other goods and services

Question 4

Primary production

Answer 4

Direct extraction of natural resources

Question 5

Secondary production

Answer 5

Turning raw materials into semi-finished or finished products

Question 6

Tertiary production

Answer 6

Provision of services

Question 7

Factors of production

Answer 7

Refers to all the resources used in production

Question 8

Labour

Answer 8

Human effort, both mental and physical
Return: salary

Question 9

Land (properties of land)

Answer 9

All the natural resources that are used in production
Return : rent

Question 10

Capital

Answer 10

All man-made resources used in production
Return : interest

Question 11

Entrepreneurship

Answer 11

Organises other factors of production ,makes final decision and bears risk
Return: profit

Question 12

Geographical mobility

Answer 12

How easily a factor of production can move from one place to another

Question 13

Occupational mobility

Answer 13

How easily a factor of production can change from one job to another

Question 14

Labour supply

Answer 14

Labour supply = number of worker x working hour of each worker

Question 15

Labour productivity

Answer 15

Productivity of labour = total output divided by total labour supply

Better working environment, better health of labours and high-quality of other factors of production

Lack of education and training and bad working environment

Question 16

Piece rate

Answer 16

Advantage to employers: more output is produce because workers have strong incentive and cost of supervising will be lower
Disadvantage: workers emphasise quantity instead of quality so the product quality will be lower ,higher cost of controlling product quality and increase the cost of measuring contribution.

Advantage to employee : fair system
Disadvantage : workers income is not stable

Question 17

Time rate

Answer 17

Employer advantage: saves cost of measuring workers contribution and concentrate on the quality of the product
Disadvantage : worker incentive is lower therefore decreases their productivity and cost of supervising will be higher

Employee advantage: workers income will be stable
Disadvantage : lower incentive to work

Question 18

Profit-sharing scheme

Answer 18

Advantage to employer: strong, working incentive and business risk can be shifted to the workers
Disadvantage : increases the cost of measuring contribution

Advantage to employee: workers can earn more if firm earns a larger profit
Disadvantage: risk is very high as no income if no profit is made

Question 19

Division of labour

Answer 19

Advantage-
Right person on the right job
Practice makes perfect
Machines are fully utilised
Amount of tools can be saved
Save production time from training and moving around different tasks 

Disadvantage
Monotonous
Interdependence
Unemployment
Loss of craftsmanship

Question 20

Definition of division of labour

Answer 20

Division of labour is a production system in which workers specialise in
producing a good or in a stage of production of a good.