Productivity

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:28AM in AAT student discussion
Can anyone give me a clue?<BR><BR>If there is an increase in productivity, this can lead to increased profits. Give example whereby it might not necessarily lead to an increase in profits.<BR><BR>Can anyone help?

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Productivity

    Hi<BR><BR>Say for example a factory employees 50 production operatives making 100 pens per hour, this means 2 pens per operative an hour.<BR><BR>25 of the operatives are made redundant, but the remaing 25 must still make 100 pens per hour. This means that each operative must make 4 pens per hour - productivity has increased by 100 percent (each operative is making twice as much) even though output has remained the same.<BR><BR>Even though total wage costs have been reduced have been reduced, quality may drop resulting in higher wasteage and there fore higher total costs.<BR><BR>Hope this helps<BR><BR>B

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