Productivity growth occurs when
A) there are more inputs.
B) firms can produce more output per unit of input.
C) more output is produced.
D) employees work extra hours.

Question

Quizplus · Accepted Answer

Productivity growth occurs when firms are able to produce more output per unit of input, which could be achieved through innovation, technological advancements, efficiency improvements, better management practices, and skill enhancements of labor force among others. More inputs or more output alone does not necessarily lead to productivity growth. Extra hours of work by employees may increase output, but it may not necessarily result in productivity growth if the output remains the same per unit of input.

Productivity Growth Occurs When