Labour Productivity
Labour productivity = production/labour
When productivity changes, it affects how productive an economy is. Labour, as an input in production, helps to determine total output. When productivity falls, labour, as an input, produces less goods and thus total production falls. The PPP (also known as the PPF) moves inward to represent the fewer production choices available. When productivity increases, the curve shifts outward to represents increased production and production choices.
DEFINITION of 'Labour Productivity'
A measurement of economic growth of a country. Labor productivity measures the amount of goods and services produced by one hour of labour. More specifically, labor productivity measures the amount of real GDP produced by an hour of labor. Growing labour productivity depends on three main factors: investment and saving in physical capital, new technology and human capital.
Production Possibility Frontier ("PPF")
Author: Geoff Riley Last updated: Sunday 23 September, 2012
A production possibility frontier (PPF) is a curve or a boundary which shows the combinations of two or more goods and services that can be produced whilst using all of the available factor resources efficiently.
We normally draw a PPF on a diagram as concave to the origin. This is because the extra output resulting from allocating more resources to one particular good may fall. I.e. as we move down the PPF, as more resources are allocated towards Good Y, the extra output gets smaller – and more of Good X has to be given up in order to produce the extra output of Good Y. This is known as the principle of diminishing returns. Diminishing returns occurs because not all factor inputs are equally suited to producing different goods and services.
Combinations of output of goods X and Y lying inside the PPF occur when there are unemployed resources or when the economy uses resources inefficiently. In the diagram above, point X is an example of this. We could increase total output by
When productivity changes, it affects how productive an economy is. Labour, as an input in production, helps to determine total output. When productivity falls, labour, as an input, produces less goods and thus total production falls. The PPP (also known as the PPF) moves inward to represent the fewer production choices available. When productivity increases, the curve shifts outward to represents increased production and production choices.
DEFINITION of 'Labour Productivity'
A measurement of economic growth of a country. Labor productivity measures the amount of goods and services produced by one hour of labour. More specifically, labor productivity measures the amount of real GDP produced by an hour of labor. Growing labour productivity depends on three main factors: investment and saving in physical capital, new technology and human capital.
Production Possibility Frontier ("PPF")
Author: Geoff Riley Last updated: Sunday 23 September, 2012
A production possibility frontier (PPF) is a curve or a boundary which shows the combinations of two or more goods and services that can be produced whilst using all of the available factor resources efficiently.
We normally draw a PPF on a diagram as concave to the origin. This is because the extra output resulting from allocating more resources to one particular good may fall. I.e. as we move down the PPF, as more resources are allocated towards Good Y, the extra output gets smaller – and more of Good X has to be given up in order to produce the extra output of Good Y. This is known as the principle of diminishing returns. Diminishing returns occurs because not all factor inputs are equally suited to producing different goods and services.
Combinations of output of goods X and Y lying inside the PPF occur when there are unemployed resources or when the economy uses resources inefficiently. In the diagram above, point X is an example of this. We could increase total output by