Production vs Productivity Flashcards
What is Primary production?
Raw materials
Primary production is “the gifts of nature” these are the raw materials that are extracted from the earth.
eg. oil and natural gas, fishing, farming/agri etc.
What is secondary production?
Production
Conversion of raw materials into a finished good
it is manufacturing or construction from the raw materials
eg. food processing, construction/manufacturing industries
What is tertiary production?
Services
provision of Indirect or Direct services
direct service- education, health care, legal services
indirect service- banking, warehousing, wholesaling
What does production mean?
Production is the conversion of raw materials into a saleable g/s that provides profit for the owner. Creation of a good using basic inputs such as making bread.
What does productivity mean?
Productivity is the rate at which the raw materials are being converted into the saleable g/s (measure the rate of production)
-output per unit of input
What are the types of goods that producers might produce?
Producers might produce producer goods, intermediate goods and final goods
What is considered a producer good?
A producer good is a good that assists in the production of other g/s eg. machinery
What is an intermediate good?
An intermediate good is a good that is used as inputs in the production of other g/s
What are final goods?
Final goods are the goods that are bought for consumption by consumers
Describe productivity
Productivity is the measure of output per unit of input
What is labour productivity?
The output per unit of labour input eg. no of refrigerators made per person employed
Labour productivity= Quantity of output
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Quantity of labour used
What is productivity of Land?
Measure of output per unit of land used
Productivity of land= quantity of output / quantity of land used
What is productivity of capital?
Measure of output per unit of capital used
Productivity of capital= quantity of output / quantity of capital used
