Topic 4 - Production costs and revenues

How is productivity calculated?

Output / Time

How can productivity be increased?

Increased training or more advanced capital machinery

What is division of labour?

When we split up the production process into smaller tasks and allow workers to specialise

What is specialisation?

The concentration of individuals, firms or countries on producing a limited range of goods, services or tasks to increase efficiency, productivity and lower costs

What are the four functions of money?

1. Medium of exchange

2. Unit of account

3. Store of value

4. Deferred payment

What are the advantages of specialisation for individuals + firms?

1. Increased output

2. Increased quality

3. Lower unit costs

4. Reduced training costs

What are the disadvantages of specialisation for firms + individuals?

1. Demotivation

2. Absenteeism

3. High employee turnover

4. Structural unemployment

What are the advantages of specialisation for countries?

1. Increased variety

2. Increased output

3. Increased trade

What are the disadvantages of specialisation for countries?

1. Over-specialisation

2. Natural resource depletion

3. Dependent on other countries