Chap15

• Productivity


  Rate at which goods are produced, and the amount produced in relation to the work, time and money needed to produce them
• Businesses can produce more output if productivity can be raised – more output with same or less input (resources)
• Productivity


  A measure of the efficiency of factors of production
• Productivity


  Measured by output per unit of input employed or by output per hours worked
• Increase in Productivity arises from both increase in LABOUR PRODUCTIVITY (output per employee) and CAPITAL PRODUCTIVITY (output per unit of capital employed)
• An increase in production DOES NOT automatically mean increase in productivity. It depends on how many inputs (factors of production) have been employed to supply the extra output.
• Factors affecting productivity - LAND

  • Fertilisers and pesticides
  • Drainage
  • Irrigation
  • Reclamation
  • Genetically modified crops
• Factors affecting productivity - LABOUR

  • Training
  • Motivation
  • Working practices
  • Migration
• Factors affecting productivity - CAPITAL


  • Introduction of new technology and advancements
• Division of labour


  Production is broken down into many separate tasks with each worker allocated to a specific task
• Division of labour


  • Can raise output per person (labour productivity) as people become more efficient through constant repetition of a task
  • Higher output per person helps to lower supply cost per unit (same salary but higher output -> profits)
  • Reduced supply costs in theory lead to lower prices for consumers -> increase of economic welfare
• Division of labour - ADVANTAGES for WORKER

  • Focus on same task – more skilled and better at their job
  • The more highly skilled, the more likely to get paid better
  • If highly skilled in a specialist task - higher job satisfaction
• Division of labour - DISADVANTAGES for WORKER

  • Work gets boring as repetitive especially if little skill needed
  • Job dissatisfaction and decreased motivation
  • Health problems (joint wear) - same position
  • Too specialised – risk of unemployment since more difficult to fit to other different types of work
• Division of labour - ADVANTAGES for BUSINESS

  • Efficiency is improved through specialisation – tasks are performed more quickly and accurately – fewer mistakes and productivity (output per worker) will rise
  • A greater use of specialist equipment is possible when workers specialise
  • Production time is reduced – no time wasted from moving from one task to another
  • Organisation of production becomes easier as specialist workers can fit more easily into a structured system of production
  • Profitability increases
• Division of labour - DISADVANTAGES for BUSINESS

  • Repetitive and boring job – workers dissatisfied and poorly motivated -> poor quality of work, staff arriving late at work, many absences, workers become detached and avoid work, high staff turnover -> reduction of productivity which negatively impacts profitability
  • Delays in production - If one stage of production depends on another (interdependence) which breaks down -> production has to stop
  • Loss of flexibility in the workplace if a highly skilled and specialist worker is absent and there is no one else to replace him – production may be disrupted