Interactive Glossary

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Productivity:

An index of efficiency, involving a ratio of outputs to inputs. Total factor productivity divides output by inputs, where the weight given the quantity of inputs is the price paid per unit input. Sometimes, output divided by labor is used as a measure of productivity, but labor productivity is only a partial measure of the efficiency of an organization, since greater output could also be due to having additional complementary inputs-such as capital or materials. Measuring inputs and outputs can be very difficult.

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