Using Figure 5, assess whether the decision to install the machine (used in production in an independent fast food shop) will be beneficial for the business and the workers.

It is stated that the production of burgers can be split into different stages following the installation of the machine. This allows for the division of labour and the subsequent specialisation of workers where production is broken down into many separate tasks. Should this be successful, workers and firms will become more productive as output per worker increases due to “learning by doing”, lowering prices and increasing output. Installing the machine is also an example of expanding firm operations so that it can fully utilise economies of scale. This is illustrated on Diagram 1 (supply/ demand diagram) where supply shifts rightward S1-S2 due to increased productive capacity, displaying the reduction in price and costs P1-P2, whilst quantity demanded QD is increased QD1-QD2. The business sells more of the good and consumers can afford to consume more, increasing welfare for both the business and workers, who are further motivated by the increase in profits increasing worker confidence in long-term firm survival. 
The firm must carefully predict the increase in productive capacity occurring due to the machine and the subsequent increase in sales, so that it can weigh up the actual profitability and create a balanced decision whether to install the machine, as it may come at large financial cost. The firm must also predict whether the reduction in prices will be enough to compete against the low-price competition from larger chains contributing to its decline in sales. Employing the machinery may also create the cost of demotivating workers who fear job losses, leading to a potential drop in worker productivity. However, this may be counteracted by productivity increases occurring due to fewer customer complaints as the machine would be able to produce burgers “to order” and combat the issue of waiting times, creating a better working environment. Overall, the installation of the machine will create productivity increases and decreases due to competing reasons. The firm employing the machinery must perform research to create a fully informed decision as to the net benefits before installing, whilst workers will experience the resultant benefits and costs.