DECA Sports and Entertainment Marketing Practice Exam

What does productivity measure in a company?

1. The profit gained from sales

2. The efficiency of producing goods or services

3. The total number of products offered

4. The effectiveness of professional development

The correct answer is: The efficiency of producing goods or services

Productivity in a company is fundamentally about measuring how efficiently goods or services are produced. This efficiency is often represented as the ratio of outputs to inputs in the production process. In other words, productivity answers the question of how well a company utilizes its resources—such as labor, materials, and technology—to generate a certain level of output. When productivity increases, it typically indicates that a company is able to produce more with the same amount of resources, which can lead to cost savings and enhanced profitability over time. Conversely, low productivity may suggest inefficiencies in the production process, potentially leading to higher operational costs and lower profit margins. In contrast, the other options focus on different aspects of business performance. Profit gained from sales specifically measures financial success, whereas the total number of products offered relates to product variety rather than efficiency. The effectiveness of professional development pertains to employee growth and training, which can indirectly impact productivity but does not measure it directly. Thus, the emphasis on efficiency in the production of goods or services accurately defines what productivity measures in a company.