Why Is Productivity So Important

question 73

Multiple Choice

Why is productivity so important?

• A)Productivity is a ratio of benefits to costs (i.e.,benefits divided by costs). 
• B)For companies,higher productivity can lead to lower costs. 
• C)For countries,higher company productivity produces a higher standard of living. 
• D)Productivity decreases make products more affordable.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating costs, from its total revenues.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and salaries, excluding direct production costs.

Revenues

The sum of revenue obtained through the sales of products or services that are central to a company's main activities.

Multiple-Step

An income statement format that separates operating revenues and expenses from nonoperating revenues, expenses, and gains and losses.