What is Productivity in Economics?

In economics, productivity calculates output per unit of input, like capital,

labor, or any other resource and is usually calculated for the economy as one,
as a gross domestic product (GDP) ratio to hours worked. Labor productivity
might be further divided by sector to evaluate trends in wage levels,
technological improvement, and labor growth. Shareholder returns and
corporate profits have a direct link to productivity growth. At the corporate
level, where productivity reflects how effective a company's production
process is, it is derived by measuring the number of units produced in relation
to employee labor hours or by measuring the net sales of a company in
relation to employee labor hours.

Productivity is a measure of how efficiently a person completes a task. We can define it

as the rate at which a company or country produces goods and services (output),
usually judged based on the amounts of inputs (labor, capital, energy, or other
resources) used to deliver those goods and services.

Short Run vs Long Run

The main difference between the short run and the long run is that
the short run is a period during which they fix the amount of at least
one input while the quantities of the other inputs are variable. The
long-run is a period during which we can change all input
quantities.

In the short run, a firm can improve production by adding

additional raw materials and labor, but not by building a new
factory. All inputs, including factory spaces, are fixed in the short
run, implying that there are no variable factors or restraints
inhibiting growth in production output.

What is Long Run?

The long-run is a conceptual concept in economics in which all economies have reached
equilibrium and all pricing and supply have completely harmonized. The long-run distinctions
with the short-run, in which there are restrictions and markets are not fully in balance. All the
inputs related to the production cycle are variable. As a result, relative costs and the
substitutability of production elements influence input selection.

In economics, the long-run is a theoretical concept in which all markets are in

equilibrium, and all prices and quantities have fully adjusted and are in
equilibrium. The long-run contrasts with the short-run, in which there are some
constraints and markets are not fully in equilibrium.

A Short Run in economics refers to a manufacturing planning period in

which a business tries to meet the market demand by keeping one or
more production inputs fixed while changing others. It varies with
industries and differs from the long run in that the latter considers all
inputs as variables.

What is the Phillips Curve?

The Phillips curve is an economic concept developed by William Phillips
stating that inflation and unemployment have a stable and inverse
relationship. The theory claims that with economic growth comes inflation,
which in turn should lead to more jobs and less unemployment. However, the
original concept has been somewhat disproven empirically due to the
occurrence of stagflation in the 1970s, when there were high levels of both
inflation and unemployment