Introduction to Production and Productivity

Tuesday, February 05, 2013


Every country uses its resources to produce goods and services in order to satisfy the unlimited wants of its people. These resources are called factors of production.

Production

Production means creation of goods and services. In economics, production refers to the output of goods and services for which people are prepared to pay a price.

Productivity

Productivity is the relationship between the physical output of a product and the factor inputs which have gone into producing that output. Therefore; Productivity = Output/Input

Productivity is usually measured in terms of output per man hour.
Fore example; In a 35 hour week, Ali produces 70 tables and Ahmed produces 105 tables. Their productivity is calculated as follows.

Productivity [Ali]       =       70/35,           =       02 tables/hour

Productivity [Ahmed] =       105/35,         =       03 tables/hour
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