Chapter 22: Problem 800

Define productivity of labor and an example of it.

Short Answer

Expert verified

Labor productivity is an economic measure that calculates the output produced per unit of labor input. The formula for labor productivity is: \( Labor\: Productivity = \frac{Total\: Output}{Total\: Labor\: Input} \). In the example of a shoe company producing 1000 shoes with 10 workers who work 160 hours each per month, the labor productivity would be 0.625 shoes per hour. This represents the average production efficiency per worker in terms of shoes produced per hour.

Step by step solution

Define labor productivity

Labor productivity is an economic measure that calculates the output (in terms of goods or services) produced per unit of labor input (in terms of working hours). It is an essential indicator of how efficiently labor resources are being used in an economy or business. The formula to calculate labor productivity is: \( Labor\: Productivity = \frac{Total\: Output}{Total\: Labor\: Input} \)

Choose a real-world example to calculate labor productivity

A real-world example to demonstrate labor productivity could be a company that manufactures and sells shoes. Let's say this company produces 1000 shoes in a month and 10 workers are involved in the production process. Each worker works 160 hours a month (assuming 40 hours per week and 4 weeks per month).

Identify the output and labor input needed for the example

In our example, the total output in this case is the number of shoes produced, which is 1000 shoes. The total labor input is the total working hours spent by all the workers, and can be calculated as: Total Labor Input = (Number of workers) X (Hours worked per worker) Total Labor Input = (10) X (160) = 1600 hours

Calculate labor productivity for the example using the formula

Now we can calculate the labor productivity for the shoe company using the formula: \( Labor\: Productivity = \frac{Total\: Output}{Total\: Labor\: Input} \) \( Labor\: Productivity = \frac{1000\: shoes}{1600\: hours} \) Labor Productivity = 0.625 shoes per hour

Interpret the result

From our calculation, the labor productivity at the shoe company is 0.625 shoes per hour. This means that, on average, each worker produces 0.625 shoes per hour. You can use this value to understand the efficiency of the company in utilizing its labor resources and compare its performance with industry standards or other businesses.