Production, Productivity, specialisation and division of labour

Question 1

What are the four factors of prouction?

Answer 1

land, labour, enterprise and capital

Question 2

What is the return on land?

Answer 2

rent

Question 3

What is the return on labour?

Answer 3

wage

Question 4

What is the return on enterprise?

Answer 4

profit

Question 5

What is the return on capital?

Answer 5

interest

Question 6

What is a capital good?

Answer 6

goods that are used to make consumer goods and services

Question 7

Give examples of capital inputs?

Answer 7

fixed machinery, hardware, software, new factories or buildings

Question 8

What are consumer goods and services?

Answer 8

goods or services which satisfy our needs and wants directly

Question 9

What are the three types of consumer goods?

Answer 9

• consumer durables
• consumer non-durables
• consumer services

Question 10

What are consumer dirables?

Answer 10

products that provide a steady flow of satisfaction / utility over their working life

Question 11

What are consumer non-durables?

Answer 11

• products that are used up in the act of consumption

Question 12

What is porduction?

Answer 12

conversion of factor inputs

Question 13

What are the two types of productivity?

Answer 13

labour, capital productivity

Question 14

What is labour productivity?

Answer 14

output per worker

total output / total number of workers

Question 15

What is capital productivity?

Answer 15

output per unit of capital

Question 16

What is factor productivity?

Answer 16

average output of all factors of production

Question 17

What is production?

Answer 17

measure of the value of the output of goods and services

Question 18

What is productivity?

Answer 18

a measure of the effeciency of factors of production

Question 19

Give the equation for output of goods and services?

Answer 19

• factor inputs + factor productivity = output of goods and services

Question 20

Why is productivity important?

Answer 20

major determinant of economic growth and of inflation

Question 21

What factors affect labour productivity?

Answer 21

• degree of competition in a market / industry
• advances in production technology
• investments in apprenticeships
• quality of management
• specialisation within a business
• higher business investment

Question 22

When does productive effeciency occur?

Answer 22

when an economy uses the minimum inputs to produce the maximum output at the lowest cost

Question 23

Average total costs equation?

Answer 23

total cost / output

Question 24

What is meant by the term opportunity cost?

Answer 24

the next best alternative forgone

Question 25

What are the four ways to improve productivity>

Answer 25

- specialisation and division of labour - better education and training - improved motivation of workers - technological advances

Question 26

When does specialisation occur?

Answer 26

when economic units such as individuals, firms, regions or countires concentrate on producing specific goods or services

Question 27

When does division of labour occur?

Answer 27

where the production is broken down into many seperate tasks

Question 28

How does specialisation increase output ?

Answer 28

- greater understanding of the requirements of production - each economic unit can specialise in what they are best at - efficient use of time as there is no switching between takss

Question 29

What are the three main advantages of specialisation?

Answer 29

- higher labour productivity and business profits - specialisation creates surplus output that can then be traded internationaly - lower prices, higher real incomes and GDP growth

Question 30

What are the disadvantages of specialisation?

Answer 30

- repetitive work, can be demotivating, lower productivity - workers may take less pride in work and quality suffers - workers may choose to move to less boring jobs, high worker turnover