Question

In an imaginary economy of Cotton Land, 180,000 tons of cotton were produced in a day. The number of people who were involved in this production was 3500 and each of them worked for 8 hours. Further, there are 50 companies that employed these people in their processing plants. Calculate the productivity of this economy.

Answer 1

The productivity of an economy is calculated by dividing the total output produced by the inputs used in its production process. Here, the inputs refer to labour hours. So, productivity is determined by dividing the number of units produced by the employee labour hours.

So, here total labour hours worked in a day = 3500 * 8 = 28,000

Total units/tonnes of cotton produced in a day = 180,000

So, the productivity = 180,000/28,000 = 6.43 tonnes of cotton/labour hour

i.e. 6.43 tonnes of cotton are produced per labour hour in this economy.