The overall effectiveness with which capital and labour are used is called
A)Factors of production
B)Production function
C)Total factor productivity
D)Productivity

Question

Quizplus · Accepted Answer

Total factor productivity (TFP) measures the efficiency with which inputs such as capital and labor are combined to produce goods and services. It is a measure of the overall effectiveness of production and can be used to determine the potential for productivity growth. Factors of production (A) refer to the resources used in the production process, such as labor, capital, and raw materials. The production function (B) is the mathematical relationship between inputs and outputs in the production process. Productivity (D) is a general term for the efficiency with which resources are used in production, but does not capture the specific concept of TFP.

The Overall Effectiveness with Which Capital and Labour Are Used