What is productivity?

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What is productivity? Productivity refers to the rate of output per worker or per machine in a factory (Bateman & McAdam, 2006). It describes a variety of measures of efficiency of production. In a simpler language, productivity refers to the amount of work produced either per worker or per hour worked. There are different kinds of productivity e.g. labour productivity, multi-factor productivity, and capital productivity. In a time of intense competition, organisations need to be highly productive in everything they do. In fact, productivity is a crucial factor not only […]

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Opportunity cost: definition and meaning

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There is no doubt that resources are limited. This scarcity of resources often makes the lives of decision makers very difficult. Therefore, economists focus on the optimal use of scare resources. Whenever there is scarcity, you need to make a choice. If you have £10, you can perhaps spend it on buying an economic textbook, or enjoying a meal in a restaurant. You cannot do both! Definition of opportunity cost Opportunity cost is one of the most fundamental ideas in economics. It refers to ‘the cost of a scarce factor […]

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Types of economy (economic systems)

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Economists recognize different types of economy (economic systems) and classify them in a number of ways. According to  Hill (2012, p.52), there are ‘three broad types of economic systems – a market economy, a command economy, and a mixed economy’. However, in addition to these three systems, there is also another system called traditional economic system. Let’s now explore what these economic systems are. Types of economy (economic systems) Traditional economy Traditional economies are the most basic type of economy. In a traditional economy, tradition (customs, belief etc.) determines the […]

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