Production
In the general meaning, production is referred for making physical
objects. But the economics meaning of the term is very broad. Any kind of work
which satisfies people’s wants and for which they are ready to pay a price is a
productive work, hence it is considered production.
In economics, production is defined as producing goods and services to
satisfy consumer wants for that they are ready to pay price. Production
includes the output of goods as well as services.
Productivity
Productivity is defined as the measure of efficiency of production. It
is an important calculation as comparison leads to competition and competition leads to efficiency. Productivity
can be used to calculate and compare the efficiency of workers, firms,
industries and countries. This is measured in terms of output per input. While
calculating productivity, it is important to take into account the quantity and
quality of inputs (factors of production) used and also the quantity and
quality of outputs (goods and services)
produced. Otherwise the comparison may be considered unfair and unrealistic. The following is the formula to calculate
productivity.
Here,
output is the quantity of goods and services produced and
input is the quantity of factors of production (land, labour and capital) used
to produce the output.
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