MGT Notes

Reference, ‘Principles of Economics,’ by N. Gregory Mankiw, 3e, Pg 11

In previous posts we looked at how entities make decisions and how they interact to make up the economy. Here we add to that discussion by defining the term ‘productivity’ which stands for the amount of goods and services produced per hour of a worker’s time. The simple fact is that higher productivity leads to a better standard of living, and the implications of this relationship are far reaching. Variations in living standards among countries is explainable by measures of productivity. Also, large variations in the average income appear as differing living standards and the overall quality of life, which can be traced back to productivity.