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In this question, the labor productivity of the worker clearly fell. This is true even though the worker produced more units of output. The problem is that the worker had to work more hours to make each of these units in the current week.
Labor productivity is a measure of how much output a worker produces for each hour that the worker is at work. The point of measuring this is to determine how efficiently a worker is working and/or how efficiently the firm’s processes make use of that worker’s labor. In general, businesses hope to increase their labor productivity. They hope to do this because it makes them more profitable and more competitive.
The way to find labor productivity is simply to divide the amount of output produced by the man hours that the employee (or employees) works. In this case, the math is simple because there is only one employee. All we have to do is to divide the output (174 in the current week and 135 in the previous week) by the hours worked (40 in the current week, 26 in the previous week).
174/40 = 4.35
135/26 = 5.19
These figures represent the worker’s productivity in the current week and the previous week, respectively.
What this means is that the worker made 5.19 units every hour last week but was only able to make 4.35 units each hour in the current week. This is a clear drop in productivity.
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