Chapter 2.docx

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Economics for Management Studies
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Ted Petit

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Chapter 2(Increasing Productivity & Quality) Productivity: measure of economic performance. It measure to how much is produced relative to the resources used to produce it. (Considers both the amounts and the quality of what is produced) Quality: fitness for use –offering features that consumers want. Four factors interact in the process: Customers, quality, productivity, profits. To measure country productivity: labour productivity of a country = Gross Domestic Product --------------------------------- Total number of Workers - Labour Productivity : partial productivity ratio calculated by dividing gross domestic product by total number of workers - Difference in productivity between nations: technologies human resources economic policies natural resources traditions - If productivity drops, wages can be increased only by reducing profits or by increasing prices. (If you lose something, you must take others resources to make your own stable). Total Quality Management (TQM): A concept that emphasizes that no defects are tolerable & that all employees are responsible for maintaining quality standards Performance Quality: the features of a product & how well it performs Quality Reliability: the consistency of quality of the performance if managers succeed in developing employees (training) empl
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