The Distinction Between Production & Productivity
- The terms production & productivity are fundamentally different
- Production is the act of adding value to the factors of production to create goods/services e.g. using tomatoes & basil to create a soup
- It is the process of factor conversion into goods/services
- It is a measure of output e.g. 3 cans of soup
- Productivity is a measure of efficiency that calculates the amount of outputs produced per unit of input
- It calculates how efficiently resources are being used in the creation of goods/services & provides a metric for comparison e.g. after training workers proved to be 27% more efficient in their productivity
- It is a measure of efficiency e.g. 3 cans produced per worker