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• Production and Productivity • GDP is the market value of all goods and services produced in a nation’s economy during a given time. • It is made up of consumer, investment, and government spending. • Does indicate the size of a nation’s economy, but does not measure the well-being of a population. • It cannot measure accurately changes in production from year to year. • A rise in prices, meaning, it costs more money to buy the same goods. • Between 1960 and 1998, GDP rose 16x. • However, there were not 16x more goods produced during that time period. • Productivity is the output of goods and services as measured per unit of input— time, workers, capital resources, etc. • Labor Productivity is the amount the work force can produce in a given time. • When productivity rises, people produce more with the same resources. • New management ideas have been implemented over the last 100 years to improve productivity: • Some of these ideas include customer satisfaction, high-quality workmanship, employee involvement, and shared vision. • The free enterprise system has given business owners incentive to risk more money on capital resources. • The value of equipment per worker has risen 148% over the last 40 years!