Total factor productivity is a measure of output that is not explained by the number of inputs used.

Question

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Total factor productivity (TFP) measures how efficiently inputs are being used to produce output. It is calculated as the difference between the actual output and the output that would be expected based solely on the amount of inputs used (such as labor, capital, and technology). Therefore, it is a measure of output that is not explained by the number of inputs used.

Total Factor Productivity Is a Measure of Output That Is