What is the relationship between productivity and the cost of production?

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Request for Question Clarification by omnivorous-ga on 07 Jan 2005 21:05 PST

Tink699 --

There are big differences in the look at these two from a
micro-economic or a macro-economic standpoint.  Which are you
interested in?

Best regards,

Omnivorous-GA

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Clarification of Question by tink699-ga on 07 Jan 2005 22:09 PST

I am interested in this from a mirco-econ standpoint.

Productivity is defined as output per number of hours worked. So if
you make 100 cars over 100 hours your productivity rate is 1 per hour.

The Cost of production is: The total of certain costs associated with
the production of merchandise. These costs include the materials to
make the merchandise (i.e. variable costs - costs that rise with an
increase in production), processing costs, and administrative and
selling expenses.

Having a relationship between these two things will mean you can work
out what your costs are per day/hour etc, then compare it to your
productivity rate. This all leads to being able to produce a break
even analysis and so on.

For a basic guide to this I would recommend this site
http://www.bbc.co.uk/schools/gcsebitesize/business/production/productioncostsrev2.shtml

Are you looking for something more in depth? Or is this rough description adequate?