4b impact of human capital on production costs

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4b impact of human capital on production costs

  1. 1. EPF4 demonstrate knowledge that many factors affect income
  2. 2.  Businesses seek to lower production costs in order to increase profits. As workers invest in their own human capital and become more skilled, they become more productive (i.e., can produce more in the same amount of time) which can lower the cost of production.
  3. 3.  When people improve their knowledge and skills through education and/or experience, it is called an investment in their human capital.
  4. 4.  Higher skilled workers increase productivity by producing more in the same period of time than lower skilled workers.
  5. 5.  Increases in productivity tend to lower cost of production. If four workers can accomplish the same amount of work in a day as five workers, this is an increase in productivity which saves the business the wages of one worker.

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