Question

What does productivity refer to?

A. employees' perceptions of how hard they work relative to their output
B. the ratio of an organization's outputs to inputs
C. the ratio of initial investments of raw products to the cost of finished products
D. a manager's performance evaluation of employees

Answer 1

Productivity measures how efficiently an organization turns inputs into outputs, and is quantified by the value produced per worker or per hour worked. It is a critical economic indicator as it affects long-term economic growth and income levels.

Step-by-step explanation:

Productivity refers to the ratio of an organization's outputs to inputs, essentially measuring the efficiency with which resources are converted into goods and services. An often-used example in understanding productivity is comparing the work output of different workers, such as a Canadian worker who can make 10 loaves of bread in an hour versus a U.S. worker who can make only two loaves in the same timeframe. The Canadian worker is considered more productive. In economic terms, productivity can be gauged using Gross Domestic Product (GDP) per worker or GDP per hour worked, which indicates the value of what is produced per worker or per hour worked.

This economic indicator is crucial because it is the primary determinant of an economy's rate of long-term economic growth and higher wages. Over time, small differences in the annual growth rate of productivity can result in significant differences in GDP per capita.