Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 1 - Part I - Ten Principles of Economics - Questions for Review: 8

Answer

Productivity is important because an increase in productivity in an economy causes an increase in the standard of living for people in that economy.

Work Step by Step

Productivity is the quantity of goods and services produced from each unit of labor input in an economy. Goods and services can be sold for money, so an increase in the quantity of goods and services leads to more income. When people have more income this increases their ability to afford resources, such as healthy food and quality healthcare, that will provide them with a better standard of living.
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