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Production vs Productivity
Production - measures the value of an output of goods and services .
Productivity- A measure of the efficiency of factors of production.
Numerical -
Denim manufacturing (metres in fabric)
Input (metres in fabric) output Production Productivity (output/input)
100 30 30 Denim Jeans 0.3
110 30 30 Denim Jeans 0.25
150 40 40 Denim Jeans 0.267
150 45 45 Denim Jeans 0.3
On day 1 the labours were very enthusiastic , they were using it efficiently , but by day 3 the Company become lenient so labour is wasting fabric , there input and output os going up but not with effectiveness .
Now the company is going to understand the problem so they were able to pull their production from 0.267 to 0.3
The efficiency will better thereby productivity will be better.
Therefore an increase in production does not automatically mean an increase in productivity - it depends on how many factors of production have been utilised to supply the extra output.
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