Economics - Chapter 7

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  • 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
    • 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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