Sunday, April 12, 2009

Tips for consumers and producers on how to save cost and increase productivity

In a fast food chain, its aim is to save cost and increase productivity. In order to do this, the costs have to be decreased. In every case, only the variable cost can be changed as fixed costs cannot be changed. Variable costs include labour, resources, etc... By changing it to marginal product when the change in total product divided the change in number of workers which means the most number of workers producing the most products per average, this will save cost on variable costs. To save even more costs for labour, machines should be introduced and fixed costs will rise and variable costs will decrease.
To increase productivity, it usually is the supply of direct labour. A change in size of the firm will affect costs. It is a common belief that the most efficient producers will be the most profitable and the most likely to survive in the long run. To do this, the firm must employ more of all the factors of production, however we cannot say how long or short run lasts because the time will vary between different firms.


1 comment:

  1. It would be great if you also apply the theory in a given context - you have mentioned fast food restaurants - maybe elaborate on that example. We have learnt the law of diminishing returns - so it is not true that "To do this, the firm must employ more of all the factors of production"

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