1.4.1 Production and Productivity — Practice Questions

Seven original multiple-choice questions on production, productivity and added value, written to the style and difficulty of AQA Paper 3 Section A. Every question carries a full worked model answer.

7 questions AQA A-Level Multiple choice Model answers included

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1. 1. Which one of the following correctly distinguishes production from productivity?

   Definition in context

   Select one answer

   A Production is measured per worker; productivity is total output.

   B Production is output in the long run; productivity is output in the short run.

   C Production is output per unit of input; productivity is total output.

   D Production is total output; productivity is output per unit of input.
   Show model answer

   Answer: D (Production is total output; productivity is output per unit of input.). Production is the total quantity of goods and services turned out by a firm, industry or economy over a period. Productivity is a measure of efficiency: how much output is obtained from each unit of input. The two move independently, which is why the distinction matters — a firm can raise production simply by hiring more workers while its output per worker falls.

   Why the other options are wrong

   • A — This reverses the two definitions. It is productivity that is expressed per unit of input, most often per worker.
   • B — Neither term is defined by a time period. Short run and long run concern which factors of production can be varied, which is a separate distinction.
   • C — Again the definitions have been swapped. Output per unit of input is the definition of productivity.

2. 2. A factory employs 25 workers and produces 3,000 units a week. Its labour productivity is

   Calculation

   Select one answer

   A 0.0083 workers per unit produced.

   B 120 units per worker per week.

   C 3,000 units per worker per week.

   D 75,000 units per worker per week.
   Show model answer

   Answer: B (120 units per worker per week.). Labour productivity is output divided by the number of workers.
   3,000 ÷ 25 = 120 units per worker per week.
   Always check the units of the answer. Productivity is an output-per-input figure, so it must come out as units per worker, not as a total or as an inverted ratio.

   Why the other options are wrong

   • A — The formula has been inverted: 25 ÷ 3,000. That gives workers per unit, which is a measure of labour input per unit rather than of productivity.
   • C — This is total output — production, not productivity. It takes no account of how many workers were needed to produce it.
   • D — The two figures have been multiplied rather than divided. Multiplying an output by a workforce produces a number with no economic meaning.

3. 3. A firm's monthly output rises from 4,000 units to 5,400 units while its workforce rises from 40 to 45 workers. Its labour productivity has

   Calculation

   Select one answer

   A Fallen by 20 units per worker.

   B Risen by 20 units per worker, from 100 to 120.

   C Risen by 35 units per worker, in line with the rise in output.

   D Stayed the same, because output and employment both rose.
   Show model answer

   Answer: B (Risen by 20 units per worker, from 100 to 120.). Work out productivity before and after, rather than looking at the changes on their own.
   Before: 4,000 ÷ 40 = 100 units per worker.
   After: 5,400 ÷ 45 = 120 units per worker.
   Productivity has risen by 20 units per worker, a rise of 20%. Output grew by 35% while the workforce grew by only 12.5%, which is why output per worker improved.

   Why the other options are wrong

   • A — The direction is wrong. Output rose proportionally faster than employment, so each worker is now producing more, not less.
   • C — 1,400 ÷ 40 = 35 divides the change in output by the original workforce. That mixes a change with a level and does not measure output per worker at either point.
   • D — Both rising does not leave productivity unchanged — that only happens if they rise by the same proportion. Here output rose by 35% and employment by 12.5%.

4. 4. A firm raises its labour productivity while wage rates remain unchanged. All other things being equal, the most likely consequence is

   Applied reasoning

   Select one answer

   A A fall in its average cost per unit.

   B A fall in its total output.

   C A rise in its average cost per unit.

   D A rise in its total fixed costs.
   Show model answer

   Answer: A (A fall in its average cost per unit.). Higher productivity means each worker produces more output for the same wage, so the labour cost per unit falls. With wage rates unchanged, average cost falls too. This is the central reason productivity matters commercially: lower unit costs can be passed to consumers as lower prices, kept as higher profit, or split between the two — and either way the firm gains a competitive advantage.

   Why the other options are wrong

   • B — Output per worker has risen, so for any given workforce total output rises rather than falls.
   • C — This has the effect backwards. Costs per unit rise when productivity falls or wages rise faster than output per worker — the opposite of what is described.
   • D — Fixed costs are unaffected by how productive workers are. Rent and insurance do not change because output per worker has improved.

5. 5. A firm doubles the size of its workforce and finds that its weekly output rises by 60%. All other things being equal, this shows that

   Applied reasoning

   Select one answer

   A Both production and productivity have risen.

   B Production has fallen and productivity has risen.

   C Production has risen and productivity has fallen.

   D Production has risen and productivity is unchanged.
   Show model answer

   Answer: C (Production has risen and productivity has fallen.). Take the two measures separately.
   Production is total output, and it has risen by 60%.
   Productivity is output per worker. Output is now 1.6 times its old level while the workforce is 2 times its old level, so output per worker is 1.6 ÷ 2 = 0.8 of what it was — a fall of 20%.
   This is exactly why the two terms cannot be used interchangeably: the firm is producing more while each worker produces less.

   Why the other options are wrong

   • A — Production has certainly risen, but productivity cannot have. Employment grew faster than output, so the output attributable to each worker must have fallen.
   • B — Production is total output, and a 60% rise in output is a rise in production by definition.
   • D — Productivity would be unchanged only if output and employment rose by the same proportion. Doubling the workforce for a 60% output gain is well short of that.

6. 6. Table 1 shows the workforce and weekly output of two firms in the same industry.
   Using Table 1, which one of the following is correct?

   Data interpretation

   Table 1: Workforce and weekly output of two firms

   Firm	Workers	Weekly output (units)
   P	30	2,700
   Q	45	3,600

   Select one answer

   A Firm P has higher production and higher labour productivity than Firm Q.

   B Firm P has higher labour productivity, but Firm Q has higher production.

   C Firm Q has higher production and higher labour productivity than Firm P.

   D Firm Q has higher labour productivity, but Firm P has higher production.
   Show model answer

   Answer: B (Firm P has higher labour productivity, but Firm Q has higher production.). Work out both measures for each firm.
   Production: P makes 2,700 units, Q makes 3,600. Q produces more.
   Labour productivity: P is 2,700 ÷ 30 = 90 units per worker; Q is 3,600 ÷ 45 = 80 units per worker. P is more productive.
   So the larger firm produces more in total while getting less out of each worker — a common pattern, and the reason both measures are reported.

   Why the other options are wrong

   • A — P is the more productive firm but it is the smaller one. 2,700 units is less total output than 3,600.
   • C — Q does produce more in total, but its output per worker is 80 against P's 90. Being bigger is not the same as being more efficient.
   • D — This reverses both measures. Q has the higher total and the lower output per worker.

7. 7. A furniture maker buys £40 of timber and other inputs and sells the finished chair for £110. The £70 difference is best described as the firm's

   Applied reasoning

   Select one answer

   A Added value.

   B Marginal cost.

   C Productivity.

   D Supernormal profit.
   Show model answer

   Answer: A (Added value.). Added value is the difference between the value of a firm's output and the cost of the inputs bought in to make it. Production is the process of adding that value: timber worth £40 becomes a chair worth £110 because labour, capital and enterprise have been applied to it. Adding value is what allows a firm to sell for more than its inputs cost.

   Why the other options are wrong

   • B — Marginal cost is the addition to total cost from producing one more unit. The £70 here is a margin between revenue and input cost, not a cost at all.
   • C — Productivity is an output-per-input ratio, so it is measured in units per worker or per hour rather than in pounds.
   • D — This is the trap. The £70 still has to cover wages, rent, machinery and every other cost the firm bears, plus normal profit. Only what remains after all of those is supernormal profit.