2.3.4 Impact on costs and sales revenue

How does increasing productivity affect average costs?

Higher productivity means more output per input, which lowers average costs.

What is the impact of lower average costs on profits?

Falling average costs can increase profits, allowing the firm to invest more and improve efficiency further.

How can lower average costs affect consumers?

Firms might pass on lower costs as lower prices, increasing competitiveness, market share, and potentially revenue.

How does efficiency affect waste?

Being more efficient reduces waste of resources and can improve product quality and brand loyalty.

What is lead time?

The delay between a decision being made and it being implemented.

Why is short lead time a competitive advantage?

Firms can respond quickly to changing demand, which is crucial in dynamic markets like technology or fashion.