Productivity Introduction Productivity is the measurement of output

Productivity Introduction

Productivity is the measurement of output compared to the use of an input. Producers desire low costs of production and are interested in increasing the productivity of inputs. An increase in productivity occurs when a given amount of inputs can produce a larger amount of output. There are three methods for increasing productivity: specialization and division of labor, investment in capital resources, and investment in human capital.

Capital Resources • Capital resources are goods produced by other people and used over and over again to produce other goods and services. Capital resources are not consumed today; instead, they are used to produce goods and services in the future. Factories and machines are examples of capital resources.

Production Process • The production process is the method or procedure used to create a good. It is the method followed to use inputs to create the desired outputs.

Technology • Technology is the application of knowledge to meet the wants of people.

Technological Change • Technological change is an advance in knowledge leading to new and improved goods and services and better ways of producing them.

Standard of Living • Standard of living is the way people live in an economy in general. It is the measure of how well off people are. The level of income, product variety and choice, employment, and purchasing power all contribute to the measure of standard of living. Standards of living are considered to be raised when people earn more money and have a greater choice of quality products to purchase. A rise in the standard of living can be discussed in terms of benefits to the consumer, producer, and worker.

Benefit • A benefit is the reward gained from an action or activity. It is something that is good or helpful.

Innovation • An innovation is a new device, a modified version of an existing device, or a new way of doing something.

Invention • An invention is something new-something that did not exist before. It is usually the first of its kind