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Production and Productivity

Production and Productivity . Production . Production is the process of transforming inputs into goods and services. We measure production as the total amount of output produced. E.g. In one month John’s Lettuce company produces 16000 lettuces, therefore

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Production and Productivity

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  1. Production and Productivity

  2. Production • Production is the process of transforming inputs into goods and services. • We measure production as the total amount of output produced. • E.g. In one month John’s Lettuce company produces 16000 lettuces, therefore total production is 16000 lettuces

  3. Productivity • Productivity = Output per unit of input OR = Rate of output • We can measure productivity in relation to • labour (Output per worker ) • Capital ( Output per machine) • Land ( Output per hectare) Productivity = • Productivity has increased if • There is more output using the same input • There are fewer inputs required to produce the same output

  4. Labour Intensive and Capital Intensive Production • The way that a firm calculates productivity may depend on the methods of production they use.

  5. Labour Intensive Production • A method of production where relatively more labour than machinery is used in the production process. • E.g. Restaurants are labour intensive as they use relatively more labour ( chefs, kitchen hands, and waiting staff) than capital resources • Productivity of labour = = amount produced per worker

  6. Capital Intensive Production • A method of production where relatively more capital resources than labour are used in the production process. • E.G. Ice cream manufacturers use relatively more machinery than labour in the production of ice cream. • Productivity of capital =

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