productivity

Examples of productivity in the following topics:

• Aggregate Production

  • The production function relates the physical outputs of production to the physical inputs or factors of production.
  • To understand how the aggregate production impacts long-run growth, it is important to understand the stages of production :
  • The average physical product is at its maximum.
  • The production function of a firm or economy can be graphed using the total, average, and marginal products.
  • The aggregate production is determined based on the stages of production and the results of the graph.

• Productive Efficiency

  • Productive efficiency occurs when production of a good is achieved at the lowest resource cost possible, given the level of production of other goods.
  • Production efficiency occurs when production of one good is achieved at the lowest resource (input) cost possible, given the level of production of the other good(s).
  • By improving these processes, an economy or business can extend its production possibility frontier outward, so that efficient production yields more output.
  • This chart shows production possibilities for production of guns and butter.
  • Point X is only possible if the means of production improve.

• Product Differentiation

  • Oligopolies can form when product differentiation causes decreased competition within an industry.
  • Product differentiation (or simply differentiation) is the process of distinguishing a product or service from others, to make it more attractive to a particular target market.
  • This involves differentiating it from competitors' products as well as a firm's own products.
  • The major sources of product differentiation are as follows:
  • A successful product differentiation strategy will move a product from competing based primarily on price to competing on non-price factors (such as product characteristics, distribution strategy, or promotional variables).

• Marginal Product of Labor (Physical)

  • When production is discrete, we can define the marginal product of labor as ΔY/ΔL where Y is output.
  • When production is continuous, the MPL is the first derivative of the production function in terms of L.
  • Graphically, the MPL is the slope of the production function.
  • gives another example of marginal product of labor.
  • This table shows hypothetical returns and marginal product of labor.

• Product Differentiation

  • Product differentiation is the process of distinguishing a product or service from others to make it more attractive to a target market.
  • Product differentiation is the process of distinguishing a product or service from others to make it more attractive to a target market .
  • Product differentiation is done in order to demonstrate the unique aspects of a firm's product and to create a sense of value.
  • Vertical: the products are differentiated based on a single characteristic and consumers are clear on which product is of higher quality.
  • A successful product differentiation strategy will move the product from competing on price to competing on non-price factors.

• Measuring Productivity

  • Productivity is represented by production functions, and is the amount of output that can be generated from a set of inputs.
  • Productivity, in economic terms, measures inputs and outputs to derive overall production efficiency within a system.
  • In order to generate meaningful information about the productivity of a given system, production functions are used to measure it.
  • Conceptually, the production function makes certain assumptions of the maximum potential production, availability of inputs and demand for outputs to create a boundary of potential production.
  • There are a variety of ways to approach the measuring of productivity in the context of production functions:

• The Importance of Productivity

  • Increased productivity means greater output from the same amount of input.
  • The final important consideration in assessing productivity potential is the production-possibility frontier (PPF), which essentially outlines the maximum production quantity of two goods (in the scope of our current technological capacity and supply).
  • This demonstrates the confinement of productivity, and thus is well captured in the Leontief production function.
  • Note that demand does not come into account in altering the production function or overall productivity potential.
  • Use the production function to determine how different variables affect output and productivity

• Other Factors of Production

  • Factors of production are the inputs to the production process.
  • Input is the starting point and output is the end point of a production process and such input-output relationship is called a production function.
  • In economics, production means creation or an addition of utility.
  • Factors of production (or productive 'inputs' or 'resources') are any commodities or services used to produce goods or services.
  • Things like technological advancement and worker productivity are intricately tied to the productivity of the inputs; it is not enough to simply have the factors of production in one place without the knowledge and ability to convert them into the correct outputs.

• Total Factor Productivity

  • Increases in total factor productivity reflect a more efficient use of inputs, and total factor productivity is often taken as a measure of long-term technological change or dynamism brought about by such factors as technical innovation.
  • Total factor productivity cannot be measured directly.
  • In the Cobb-Douglas production function, total factor productivity is captured by the variable A:
  • How effectively the factors of production are used is also important.
  • Total factor productivity can be used to measure competitiveness.

• Changing Worker Productivity

  • A worker with a more productive tool in more productive.
  • Another way to increase productivity is to find ways to increase the revenue of the product generated by the workers.
  • Since productivity is measured in dollars per worker, being able to generate more revenue from the same output is reflected in an increase in worker productivity.
  • Worker productivity in the long-run is related to real income.
  • Examine the role of human capital in production and economic growth