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What is meant by Productivity?

Productivity is the ratio of outputs to inputs. It refers to the volume of output produced from a given volume of inputs or resources. If the firm becomes more productive, then it has become more efficient, since productivity is an efficiency measure. Productivity can be:

Labour productivity

Total output in a given time period
= Output per worker
Quantity of labour employed

Capital productivity

Total output in a given time period
= Output per capital input
Quantity or Value of Capital employed

How to improve productivity?

Productivity can be improved by:

  • Raising the skill level of the workers through training
  • Using more technologically advanced equipment in the production process.
  • Improving the motivation level of the employees
  • By managing the available resource in a more efficient way.

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