Total factor productivity explicitly considers gains from using fewer physical inputs as well as substitution among inputs.

Question

Quizplus · Accepted Answer

Total factor productivity (TFP) measures the efficiency with which inputs, such as labor and capital, are used in the production process to generate outputs. TFP considers gains from using fewer physical inputs, such as reducing waste, as well as substitution among inputs, such as using more skilled labor instead of capital. Therefore, the statement is true.

Total Factor Productivity Explicitly Considers Gains from Using Fewer Physical