Top: Business: Terminology: Efficiency: Measuring Efficiency

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Unit Cost

Efficiency can be measured by finding out the cost per item produced over a period of time. If it costs less to produce an item, the business is more efficient.


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Productivity

Efficiency can be measured by output per worker over a certain amount of time. This can be used to motivate workers when it´s linked to pay.


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Product Wastage

Poor quality products leads to more wastage, which in turn leads to higher unit costs. Revenue is lost when sales are lost. Reducing wastage will improve efficiency. 



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