Productivity is an important tool for managers as it helps them to track progress toward the more efficient use of resources in producing goods and services.  Explain.

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Productivity can be defined as a measure of how much a firm makes with a given amount of resources.  For example, a firm that produces $100 worth of goods and services per employee per hour is more productive than one that produces $50 worth of goods and services per employee.  In a sense, then, productivity is a measure of efficiency.  It measures how efficiently a firm uses the resources that it has.  Therefore, productivity is a useful measure for managers.  The higher the productivity, the more efficient the firm.  This means that productivity can be used to measure increases or decreases in efficiency.

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