ATAR Notes: Forum
VCE Stuff => VCE Business Studies => VCE Subjects + Help => VCE Economics => Topic started by: Seamus Wong on April 03, 2019, 06:45:47 pm
-
Hey,
could someone answer this question for me:
"Explain how a rise in the costs of production for firms or falling profits will likely affect a nations productive capacity"
Here's my answer: (I feel as if an element is missing from it)
An increase in the cost of production (i.e. increased costs associated with the employment of Natural, Capital and Labour resources) by firms decreases their productivity levels (i.e. the level of output gained for a given quantity of inputs) and hence their profits. This reduces the ability and willingness of firms to continue supplying given quantities of goods at given prices which in turn decreases the total level of Aggregate Supply, thus contracting the nations productive capacity.
-
Less productive captivity means less production means less goods means less GDP... Sorry weird question kinda stating obvious
-
Less productive captivity means less production means less goods means less GDP... Sorry weird question kinda stating obvious
That doesn't really answer the question at all I don't think.
-
Hey,
could someone answer this question for me:
"Explain how a rise in the costs of production for firms or falling profits will likely affect a nations productive capacity"
Here's my answer: (I feel as if an element is missing from it)
An increase in the cost of production (i.e. increased costs associated with the employment of Natural, Capital and Labour resources) by firms decreases their productivity levels (i.e. the level of output gained for a given quantity of inputs) and hence their profits. This reduces the ability and willingness of firms to continue supplying given quantities of goods at given prices which in turn decreases the total level of Aggregate Supply, thus contracting the nations productive capacity.
I think your answer is fine, especially since this sort of a question wouldn't be worth more than 2-3 marks. However I wouldn't say it contracts the nations productive capacity, I think reduced/decreases may be better, but I would just listen to ur teacher
-
Thanks for the feedback. Yeah I see what you mean with employing the term 'contracts', since it links in with movements along the demand and supply curves and may cause some degree of confusion. I'll stick to reduce/decrease.