gcse economics - how we work- efficiency
What is efficiency?
Producing at a lower cost or using fewer resources when making a product or providing a service. Also meeting the needs of consumers.
HOW TO BECOME EFFICIENT
• Use fewer raw materials
• Use fewer workers
• Have fewer managers
• Replace high cost labour with low cost technology
• Less waste, fewer reject goods
BENEFITS OF EFFICIENCY
• Lower costs
• Lower prices
• More sales (revenue)
• Greater profits
• Higher bonuses for workers / managers
• Greater returns for shareholders (limited company)
PROBLEMS OF GREATER EFFICIENCY
• Quality may suffer
• Low morale in the workplace as jobs are lost
• Stress as people have to work harder
• Redundancy payments to workers
• Initial cost of buying technology
a. How could you be more efficient when doing your homework?
b. How could a manufacturing company become more efficient? What are the advantages and disadvantages of this?
c. How could a service company like Toys r Us
become more efficient?
d.Efficiency also means the ability to produce the goods that people want in society. Can you think of any businesses which are efficient in this respect?
How could they make sure that they are efficient?
These GCSE Economics revision notes have been kindly provided by Peter Davies of Mill Hill School, Ripley
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