Which of the following statements is true of productivity measures?
A) Partial productivity and total factor productivity measures never work best together.
B) Partial productivity explicitly considers gains from using fewer physical inputs as well as substitution among inputs.
C) All productivity measures are physical measures lacking financial content.
D) Total factor productivity considers the trade-offs across various inputs based on current input prices.

Question

Quizplus · Accepted Answer

Total factor productivity considers the trade-offs across various inputs based on current input prices, which is a characteristic of productivity measures. Partial productivity, on the other hand, only focuses on a single input-output relationship and may not be as comprehensive as total factor productivity. It is also possible to use both partial and total factor productivity measures together to get a more comprehensive picture of productivity. Option A is incorrect because it suggests that using both measures together doesn't work, which is not true. Option B is also incorrect because while partial productivity does consider substitution among inputs, it is not the only measure that does this. Finally, option C is incorrect because some productivity measures can consider financial content, such as total factor productivity which considers input prices.

Which of the Following Statements Is True of Productivity Measures