Economics - Chapter 7
- Created by: sammilaw
- Created on: 14-12-14 19:00
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- Economics - Chapter 7
- Production and Efficiency
- Benefits of the division of labour
- Working to one's strengths
- Use of capital equipment
- Increased aptitude
- Time saving
- Advantages of higher productivity
- Lower average costs
- Improved competitiveness in international markets
- Higher profits
- Higher real wages
- Growth of the economy
- Productive efficiency
- Achieved when a firm's output is produced at the minimum average cost
- Illustrated on any point of a PPB curve
- Costs of production
- Fixed Costs - costs of production that do not vary when output changes
- i.e. rent, insurance charges
- Variable Costs - costs of production that vary with output
- i.e. raw materials, labour costs
- Fixed Costs - costs of production that do not vary when output changes
- Economies of scale:
- Technical
- Marketing
- Managerial
- Financial
- Networking
- Diseconomies of scale:
- Co-operation
- Control
- Co-ordination
- How to avoid diseconomies of scale:
- Developments in HRM (Human Resource Management)
- Incentives i.e. pay schemes
- Out-sourcing
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