Alternative Measures of Productivity A common measure of productivity, as explained in thischapter and as used by many business and trade organizations, including the U.S. Bureau of LaborStatistics, is the ratio of output to input, where input is typically measured in units of materials, laborhours, or related measures. An alternative is to use the ratio of capacity available to capacity utilized. For example, the amount of capacity in the U.S. manufacturing industries has almost doubledover the past two decades. However, the rate of capacity utilization (output/capacity available) hasfallen slightly over this period of time, with a steep drop in 2009 followed by slow increases in 2010and 2011. Some would say that this measure gives a better picture of productivity than the one wehave used in the chapter.Required Compare the measure of productivity based on capacity utilization with the measure used inthe chapter. Which measure do you think is most useful for assessing the state of the manufacturing sectorof the economy? Explain briefly
Alternative Measures of Productivity A common measure of productivity, as explained in this
chapter and as used by many business and trade organizations, including the U.S. Bureau of Labor
Statistics, is the ratio of output to input, where input is typically measured in units of materials, labor
hours, or related measures. An alternative is to use the ratio of capacity available to capacity utilized. For example, the amount of capacity in the U.S. manufacturing industries has almost doubled
over the past two decades. However, the rate of capacity utilization (output/capacity available) has
fallen slightly over this period of time, with a steep drop in 2009 followed by slow increases in 2010
and 2011. Some would say that this measure gives a better picture of productivity than the one we
have used in the chapter.
Required Compare the measure of productivity based on capacity utilization with the measure used in
the chapter. Which measure do you think is most useful for assessing the state of the manufacturing sector
of the economy? Explain briefly
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