Sebastian de Jesus Torres Aquino - Production, Productivity and Costs.

Economics
Sebastian Torres
12th Grade
Production, Productivity and Costs
1. What are the missing words in the following sentences?

a. How much is produced per one hour is the normal way of measuring the cost of
labor
b. Production includes the output of both goods and services.
2. Which two of the following are examples of secondary production
a. Serving in a shop
b. Preparing and packaging frozen food
c. Operating a telephone switchboard
d. Bottling milk
3. Which one of the following does not occur when the division of labor is introduced?
a. Productivity increases
b. More specialized machinery is used
c. Work becomes more repetitive
d. Workers need a wider range of skills
e. Movement of workers is reduced
4. What do you consider to be the main benefits which workers have obtained from the
widespread application of the division of labor?
- It increases the amount of jobs available fit for different inclinations
- Productivity increased, allowing workers to operate more efficiently and greater
amounts of products for the factories and there’s no loss in time when workers
switch between tasks since they just don’t.
5. The most famous description of the effects of the division of labor was written by the
founder of modern economics, Adam Smith. Give three reasons why specialization made
possible a daily output per worker of 4800 pins, whereas without specialization it would
have been less than 20 pins per day.
1) You don’t have one person switching between tasks and constantly changing
tools, meaning that time is saved and the work has a constant flow.
2) You have one person working alone making one pin at a time or you can have 10
workers, each doing one task to make the pin and make 10+ pis at once.
3) Specialization allows workers to focus on one task and develop this skill
efficiently.
1. In the short run, which two of the following are described as fixed costs?
a. Fuel and power
b. Fire insurance on factory buildings
c. Raw materials
d. Rent
2. What are the missing quantities in the table below, which lists output in tonnes per week?
Number of workers Total product Average product Marginal product
1 100 100 100
2 240 120 120
3 360 120 120
3. This question refers to Figure 6.5. What are the main items of (a) fixed costs, and (b)
variable costs which must be met in order to keep a bus in regular service?
Fixed costs: infrastructure (construction, land)
Variable costs: operation (maintenance, labor fuel)
4. The table below shows how the output of a firm varies as more workers are employed
Number of workers Total output (units)
1 10
2 24
3 39
4 48
5 55
After the employment of which number of workers does the productivity of labor begin
to decline?
After worker number 4. Between worker 1-3 there’s an increase of 1 and 2, but once
worker 4 is reached there is a decrease of 1 per worker.
5. Which one of the following would lead to an increase in a firm's variable costs?
a. An increase in the rate of interest charged on bank loans
b. An increase in local authority rates
c. An increase in the price of raw materials
d. An increase in the rental changes on photocopiers and other office equipment
6. A publisher has to decide on the price she should charge for a new book. She estimates
that the fixed costs of producing the book will be £20,000 and the variable costs of will
be £3 per copy. She has agreed to pay the author a royalty equal to 10 percent (one-tenth)
of the sales revenue, and she estimates the demand for the book to be such that
- 20,000 copies could be sold at a price of £5 per copy
- 30,000 copies could be sold at a price of £4 per copy
On the basis of these estimates, which price would you advise the publisher to charge?
Explain your answer.
She should charge £4 per copy, regarding the fact that she will only be gaining £1 per copy, in
the overall run, she will make more money by charging less since the demand or volume of
clients will be way higher.
20,000 copies at £5= £100,000 -10% = £10,000
30,000 copies at £4= £120,000 -10% = £12,000
1. What does the illustration tell us about the effects of technical progress on the
employment of labor in this industry? Explain your answer
With the advancement of technology, there has been a decrease in the number of hours
worked to achieve the same number of product output.
2. How do you think the type of labor skills required in the textile industry has changed?
Explain your answer
The labor skills went from needing a heavy amount of workers in perfect physical
conditions to just a couple of specialized workers to operate the machinery.
3. Two important new techniques were introduced in the 1970s. How would these technical
improvements affect the rate of depreciation in the textile industry?
It places both techniques at the same level of depreciation, making them the same price
and up to the public to select based on the quality of work, rather than the price of work
output.

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Economics

Production, Productivity and Costs

1. What are the missing words in the following sentences?

Number of workers Total product Average product Marginal product

1 100 100 100

2 240 120 120

3 360 120 120

Number of workers Total output (units)

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