In my essay practise revision notes, I took all of the past paper questions from previous years and split them up into sub-questions to help me to formulate paragraphs based on different concepts and arguments that I could memorise for the exam. The document will include my own style of writing and...
ESSAY PRACTISE Alternative
Perspectives - Technical Efficiency
1. Define Technical efficiency.
Firms achieve Technical Efficiency when they reach the optimal level of
production from available resources. In the labour market, this would mean
that labour output is maximised.
2. How do firms achieve technical efficiency? Use economic
theory to explain your answer.
In order to achieve technical efficiency firms will need to maximise output on
the boundary of their production function frontier. In Orthodox theory we use
this general mathematical approach to show how firms can become more
efficient.
INSERT Production Diagram HERE
This model is a very restrictive approach with such strong assumptions. The
outer limit is not well-defined and there are measurement issues and problems
with aggregation. Heterodox economists argue that it is too oversimplified and
argue it is worth looking more in depth at the mechanisms within production
and to analyse this instead of taking it for granted. We need to fully
understand the workings of production before concluding anything about
achieving efficiency.
3. In practical terms, how can firms improve efficiency?
Even though firms may not know their production function in the first place,
there are ways in which they can improve efficiency.
… examples ie: Taylorism
One way in which firms can improve efficiency is by adopting scientific
management (Taylor, 1911). This practice means to increase specialisation in
the production process which leads to a rise in productivity on a narrower
range of outputs. Many economists see this as desirable to increase efficiency
but there are doubts about the benefits of specialisation. Confined,
monotonous, repetitive tasks cause workers to have lower human capital and
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