The productivity component measures the reduction in costs attributable to a reduction in the quantity of inputs used in year 2 relative to the quantity of inputs that would have been used in year 1 to produce the year 2 output.

Question

Quizplus · Accepted Answer

This is an accurate definition of productivity. It is defined as the ratio of output to inputs used in a production process, and a reduction in input usage that results in the same level of output indicates an increase in productivity.

The Productivity Component Measures the Reduction in Costs Attributable to a Reduction