YOONSEO LEE:Business firms hold a significant role in the Australian economy of maximising productivity, which refers to the volume of goods and services (g/s) produced per unit of time, measured as the OUTPUT/INPUT (per unit of time). By effectively reallocating resources (eg. labour and capital), firms can increase the marginal physical product (MPP) of their workers. This is achieved through the division of labour in which labourers are divided and allocated to a specific step in the production process (ie. assembly line practices). By providing specific and directed on-site training to these individuals, this encourages the specialisation of labour, allowing employees to develop their skillset of work practices. This leads to increased output while maintaining the number of hours worked per employee (ie. their input), therefore, increasing productivity. In recent years, the manufacturing industry from secondary sector has adopted new assembly line methods that allow them to increase their productivity. Ford planned to increase the division of labour by shifting 90% of their production plants to utilise the three-shift method by 2017, allowing them to increase productivity by more than 30%. This specialisation in labour results in more efficient and continuous production, allowing for increased efficiency of production costs, leading to an increase level of output with a constant level of input (ie. increased productivity). By establishing efficient production assembly lines where higher capital inputs are present, such as more machinery and onsite training, the capital to labour ratio is increases. This results in capital deepening, allowing Australia’s capital stock growth rate to overtake the growth rate of its labour force. Evidently, through the division of labour, firms can increase and maximise the productivity, enabling them to fulfil their role in the economy.
Mandy:
Another role of business firms in the Australian economy is to maximise productivity, which refers to the relationship between the volume of goods and services produced over a given time period and the volume of resources used in their production. This can be represented by the formula, Productivity = Outputs / Inputs per unit of time. Productivity maximisation can be achieved through capital and the labour force, known as the capital-labour ratio. For productivity to increase, the output of goods and services must rise more proportionately in response to any given increase in the input of resource (as measured by the marginal physical product (MPP)). This is achieved by increasing specialisation (e.g. division of labour) through specific programs encouraging the expansion of certain skills. Specialisation results in an increase in productivity per worker by taking advantage of their skills and abilities. As a result, capital equipment (e.g. tools, machinery, and equipment) is efficiently used, promoting capital deepening where Australia’s capital stock expands at a greater rate than the labour force (i.e. increase in capital-labour ratio). This is turn increases GDP and living standards over time. Therefore, by effectively utilising resources, business firms can maximise productivity, contributing to Australia’s overall economy.