The meaning of productivity, including labour productivity
Productivity measures how much output a firm produces per unit of input. Labour productivity specifically measures output per worker.
Formula
Labour Productivity = Total Output ÷ Number of Workers
Real World
In 2023, Toyota's UK plant at Burnaston produced around 150,000 vehicles with approximately 3,000 employees — a labour productivity of roughly 50 cars per worker per year, making it one of Europe's most efficient car plants.
Exam Focus
Always show the calculation with units (output per worker) and distinguish between a rise in productivity and a rise in total output — they are not the same.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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