What term is used to measure the efficiency of producing goods and services?

The term that is used to measure the efficiency of producing goods and services is productivity. Productivity refers to the ratio of outputs produced to the inputs used in the production process. It essentially captures how effectively resources, such as labor and capital, are utilized to generate products and services.

High productivity indicates that a greater amount of output is being produced with the same or fewer resources, reflecting an efficient production process. Conversely, low productivity suggests inefficiencies where more resources are required to produce the same level of output.

This concept is critical in economics because improvements in productivity can lead to higher economic growth, increased competitiveness, and an overall enhancement of living standards. Understanding productivity helps businesses and policymakers make informed decisions about resource allocation, technological advancement, and labor force development.