Capacity, Efficiency and Productivity (AQA A-Level Business): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Define capacity
Define capacity
Maximum output a business can produce with available resources
Define excess capacity
Define excess capacity
Actual production falls below maximum potential output
Define labour productivity
Define labour productivity
Output produced per worker in a given time period
Define unit cost
Define unit cost
Cost of producing one single unit of output
Formula for unit cost
Formula for unit cost
Total cost ÷ Units of output
Effect of higher productivity on unit costs
Effect of higher productivity on unit costs
Lower unit costs → more competitive pricing
Optimal level of capacity
Optimal level of capacity
Close to 100% capacity whilst maintaining flexibility
Impact of increased capacity utilisation on unit costs
Impact of increased capacity utilisation on unit costs
Unit costs fall (fixed costs spread over more units)
4 methods to increase efficiency
4 methods to increase efficiency
Technology, training, job redesign, workforce reduction
Define job redesign
Define job redesign
Changing job content in terms of duties & responsibilities