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QCE Economics
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Which statement uses the term 'productivity' accurately?
- A factory produced more goods this year because it hired 20% more workers.
- A factory produced 20% more goods per worker after installing new machinery.
- A factory used all of its machines with none left idle.
- A factory's total sales revenue rose by 20% after prices increased.
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Answer: B
Productivity is output per unit of input, usually per worker or per hour. Producing 20% more goods per worker with new machinery is a rise in productivity. Producing more only because more workers were hired raises total output but not output per worker. Using every machine with none idle describes full employment of resources, which is closer to efficiency than productivity. A rise in sales revenue caused by higher prices says nothing about the physical output produced per input.
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