How is productivity measured?

Productivity is most commonly measured as the total output produced divided by the total input used in the production process. In the context of labor productivity, an essential way to evaluate this is to take total output and divide it by the total number of employees. This measurement provides insight into how efficiently a workforce is being utilized to produce goods or services.

By assessing productivity in this manner, businesses and economists can discern how many products or services each employee contributes to the overall output, thereby identifying the effectiveness of labor within the organization. A higher ratio indicates that fewer employees are producing more output, which is generally a desirable outcome for maximizing efficiency and profitability.

In contrast, other options describe different relationships that don't directly gauge productivity in the conventional sense. For instance, dividing total output by total resources might capture productivity in broader terms but does not specifically focus on labor alone. Similarly, total input divided by total profit does not reflect productivity per labor unit but rather looks at the relationship between costs and revenue. Lastly, total revenue divided by total units sold measures sales performance rather than productivity in terms of outputs generated per employee or input used.