GCSE-ready- Home
- Lessons
- GCSE & IGCSE Business
- Productivity and production methods
Productivity and production methods
🎬 The doodle video for this lesson is coming soon. Subscribe on YouTube to see it first.
How a business combines people and machines affects how much it can produce and at what cost.
Labour and capital intensive
Labour-intensive: uses a high proportion of workers compared with machines, such as hand-made furniture or hairdressing. Flexible but higher labour costs.
Capital-intensive: uses a high proportion of machinery, such as car assembly with robots. High output and low unit costs, but expensive to set up.
Capital-intensive: uses a high proportion of machinery, such as car assembly with robots. High output and low unit costs, but expensive to set up.
Productivity
Productivity = output ÷ number of workers (for a given time period).
Higher productivity means lower cost per unit, more competitive prices and possibly higher wages.
It can be improved by training, better equipment, better motivation and better methods.
Higher productivity means lower cost per unit, more competitive prices and possibly higher wages.
It can be improved by training, better equipment, better motivation and better methods.
Technology and robotics
Robots work continuously, accurately and in dangerous conditions.
But they are expensive to buy and maintain, can replace jobs, and are less flexible.
Businesses must balance cost, productivity, quality and flexibility.
But they are expensive to buy and maintain, can replace jobs, and are less flexible.
Businesses must balance cost, productivity, quality and flexibility.
A factory makes 6000 units a week with 40 workers. After training, 40 workers make 7200 units. By how much has productivity per worker risen?
- Before: 6000 ÷ 40 = 150
- After: 7200 ÷ 40 = 180
- 180 − 150
Answer: 30 units per worker per week
Labour-intensive uses mostly people; capital-intensive uses mostly machines. Productivity = output ÷ workers. Higher productivity lowers unit costs. Robots raise output and accuracy but are costly and inflexible.
Check you have got it
Answer 7 quick questions with instant marking. If you get one wrong, GCSE-ready shows you why and gives you another go. It is free, and you do not need an account.