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Term 3 Production
Productivity, Capital, Internal & External Growth, Cottage & Linkage Industries
| Question | Answer |
|---|---|
| What is Production? | It means making goods and services out of resources |
| What is Productivity? | It is a measure of how much output can be produced from a given level of input. Formula=output/input |
| What are the factors of Production? | 1. Land: natural resources 2. Labour: physical and mental contributions of an employee 3. Capital: items that go into producing other things 4. Enterprise: brings all the factors together to produce goods to make profits while taking risks |
| List 6 natural resources that can be found in the Caribbean | Bauxite Cement Oil and Gas Cement Blue Mountain Coffee |
| What is automation? | The technology applied to produce goods without human input. |
| What is computerisation? | This is to use a computer to do task (such as carrying out calculations and planning operations) that were previously carried out by people. |
| Importance of productivity | To improve labour supply Human and Resource Development |
| What is the role of capital in productivity? | The term capital refers to the machinery, tools and buildings, that a business uses to produce other goods. |
| What are the types of capital? | Fixed Capital: durable capital equipment that can be used repeatedly used. Working Capital: the capital needed to pay for the day-to-day operation of the business. Venture Capital: this is start-up capital it provides to funds |
| What are the types of production? | Primary: consists of extracting natural resources Secondary: These resources can then be used in secondary production which consists of manufacturing goods as well as constructions. Tertiary: consists of serving in the form of direct services to people. |
| What are some methods of production? | Job: When a one-off job involves many people to complete it Batch: When a number of identical items are produced in a set or batch. Flow: When goods and services are produced down a line. Lean: To eliminate waste from manufacturing |
| What are the levels of prduction? | Subsistence: Only sufficient to meets the basic needs of a local population and uses bartering |
| What is subsistence production? | Subsistence: Only sufficient to meets the basic needs of a local population and uses bartering |
| What is domestic production? | Domestic: To supply one's country, uses its country's resources creates employment and saves foreign exchange |
| What is surplus production? | Surplus: An industry becomes more efficient; surplus starts to develop. Then it is organised into small factories. Entrepreneurs start to look for a way to benefit from this surplus then they extend their scope of market leading to export production. |
| What is export production? | Export: Better organisation of production and a more intensive use of capital makes it possible to export goods and services. |
| What are economies of scale? | As businesses get better, they are set to operate on a larger scale and therefore benefit from economies of scale these are advantages that a larger business has over a smaller one in terms of being able to produce a larger output at a lower unit cost. |
| What are commercial economies of scale? | Commercial economies refer to the advantage in buying and selling of goods raw material and other purchases it's when you buy in bulk reducing unit transport costs and unit prices. |
| What are financial economies of scale? | Large firms are able to raise finance more cheaply than smaller firms e.g. a large firm's reputation may enable the firm to get a bank loan at a lower rate of interest than a smaller firm. |
| What are marketing economies of scale? | Marketing costs are lower when you produce on a large scale for example the unit cost of marketing campaign that reaches millions of customers is likely to be lower than the unit cost of a much smaller marketing campaign run by a small firm. |
| What are diseconomies of scale? | This is when a friend becomes too large it results in increasing output or sales but only at the expense of higher unit costs problems that arise is ineffective communication staff inertia and losing touch with customers. |
| What are cottage industries? | These are small scale productions that takes place in people's homes. |
| What are the characteristics of cottage industries? | Homebase Mainly manual Small Scale Uses local raw materials Uses family members as labour |
| Give examples of cottage industries | Bottled fruit jam and sauces Chairs woven baskets and wooden toys |
| What are the functions of small businesses? | They create employment They cater for niche marketing |
| What are the advantages of small businesses? | Small businesses generate employment and income Small businesses increase competition for larger firms' Small businesses introduce new products and ideas. |
| What is the disadvantage of small businesses? | Owners find it difficult to source finance Limited ability to serve customers No benefit from cost advantage No access to research and development facilities Less well known |
| How does a business grow internally? | Opening other outlets, the idea is to introduce multiple outlets under a single ownership Employing more workers Increasing capital Establishing E -commerce. |
| How does a business grow externally? | Joint ventures to form a business between two companies Mergers emerge occurs in two businesses combined to form a single company. Takeover: occurs in one business games control of another business |
| What are linkage industries? | One that is connected to another industry because it provides supplies for it. e.g. hardware store sells glue, nails and tools to furniture makers. |
| What are backward linkage industries? | When an industry depends on the output from another industry which is at an early stage of production. e.g. to go back to the source, you got something. Oil company back to the Oil pit |
| What are forward linkages industries? | When one industry or firm supplies another industry or firm further up the supply chain. e.g. hardware to furniture store to restaurant to tourist who sit on the chair. |
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