Difference between Production and Productivity

Production is the process of combining units of inputs (natural, man-made and human resources) to create output (goods and services) capable of satisfying human needs and wants.

Productivity is the increase of output from each unit in the production process.  There are several ways of achieving productivity. These include the training of workers and the introduction of machinery and equipment into the production process.

Importance of Productivity
Productivity increases output. High productivity results in lower cost per unit of output resulting in higher levels of profit for a business. For example, a factory worker can produce 10 items in an hour and he subsequently produces 20 units in the same hour after some training. His productivity has doubled and the business will benefit from a fall in unit cost as more units are being produces at the same costs of production.

Higher profits for the firm will mean more funds available for its expansion, new business ventures and community support. It may also wish to pass on the benefits of lower costs to consumers in the form of lower prices.

Tell a friend

Leave a Reply