A Level Economics AQA Practice Exam

What is labour productivity?

1. Total output produced divided by time period

2. Output per time period divided by number of employees

3. The dollar value of output per employee

4. A measure of employee satisfaction

The correct answer is: Output per time period divided by number of employees

Labour productivity refers to the amount of output produced per unit of labor input in a given time period. When calculating labor productivity, it is common to assess the output produced by each individual employee, which is precisely what is represented in the choice that states "output per time period divided by number of employees." This measurement provides insights into how efficiently labor is being used within an organization. This understanding of labor productivity is crucial, as higher productivity indicates that workers are producing more goods or services in the same amount of time, which can lead to increased profitability for a business. Conversely, other options such as total output produced divided by time period measure broader concepts of productivity but do not accurately reflect productivity per employee. Additionally, the dollar value of output per employee would look at revenue generated rather than the productivity mechanics, and a measure of employee satisfaction is unrelated to output measures. Therefore, the choice that expresses output in relation to the number of employees directly addresses the definition of labor productivity.