1.2.2 Productivity and division of labour

Productivity

Output per unit of input (in a given time period)

Labour productivity

Output per worker

• Firm 1 uses 10 machines and makes 100 products. 

• Firm 2 uses 5 machines and makes 100 products. 

Which firm has more productivity?

the production is the same, but firm 2 has the highest productivity. 

Production equasion

Total output
Number of inputs

How can productivity be improved

If businesses make better use of their resources such as land labour and capital.

How can land be improved to increase productivity

Land can be made more fertile. E.g. given fertilisers or pesticides, proper drainage can be implemented to prevent flood damage, irrigation systems (redirection of water from rivers to be used in dry areas to help crops grow), reclamation (the creation of new land from the ocean/river/lakes, GM crops. 

How can labour be improved to increase productivity

Training and education, increased motivation, improved working conditions, change of working practices (e.g. factory layout), migration (attract more skilled workers from overseas)

How can capital be improved to increase productivity

Improving technology. This can result in increased productivity in all 3 sectors.  

Division of labour

the breaking down of the production process into smaller parts, it allows people to concentrate on the task/skill at which they are best. 

Advantages of division of labour

• Increased productivity: Specialisation allows workers to become more skilled in specific tasks, leading to higher efficiency.

• Less time wasted changing between tasks.

• Economies of Scale: Larger quantities of identical goods can be produced more efficiently.

• Lower Costs: Reduced training time and waste contribute to cost savings.

Disadvantages of division of labour

• Monotony: Workers may find repetitive tasks monotonous, leading to job dissatisfaction. (Solution = job rotation (changing roles))

• Productivity may not be improved if workers are not motivated.

• Workers may need to be trained – this is cost to firms