productivity

Question 1

what is productivity

Answer 1

measures the efficiency with which resources are used

Question 2

what is labour productivity

Answer 2

it’s the amount used per employee per hour

Question 3

labour productivity formula

Answer 3

output per time period
———————————-
number of employees

Question 4

what are the factors influencing productivity

Answer 4

physical capital( tools and machines)- improving this will help improve productivity
human capital- skills of workforce, specialist training can help improve it
organising resources more efficiently- avoids delays

Question 5

how do productivity and competitiveness link

Answer 5

when successful businesses increase productivity more can be produced using the same resources
if average costs fall in a competitive market the business will gain competitive advantage
this opens up opportunities to reduce prices, improve quality or increase profitability

Question 6

productivity and wages

Answer 6

improving productivity makes it possible to raise pay, each employee can add more value
wages are often linked to production targets and bonuses may be paid if they exceed the targets
productive employees can command higher wages when applying for new jobs
employees may be more motivated

Question 7

productivity and economic growth

Answer 7

as a business becomes more productive the supply of goods increases, costs and prices may fall, standard of living rise
productivity is an important element of economic growth
but involves structural change like redundancy

Question 8

capital intensive production

Answer 8

production that used large amounts of capital and relatively little labour

Question 9

labour intense production

Answer 9

production that uses large amounts of labour and little capital

Question 10

problems with labour

Answer 10

skills may no longer be needed
retraining is necessary
new investment in human capital is needed

Question 11

problems with capital

Answer 11

tools and machinery may become obsolete
failure to upgrade may mean losing competitive advantage
new investment into capital is needed