What term describes how efficiently goods and services are produced?

The term that describes how efficiently goods and services are produced is productivity. Productivity measures the output produced per unit of input, which indicates how effectively resources such as labor, materials, and technology are utilized in the production process. A high level of productivity means that a company can produce more with the same amount of resources, leading to better profitability and competitiveness in the marketplace.

Understanding productivity is crucial for businesses as it can reveal areas for improvement, guide investment in training or technology, and ultimately enhance performance. In contrast, while terms like capacity refer to the maximum output that can be produced under certain conditions, and output simply describes the total amount produced, productivity specifically focuses on the efficiency aspect of production, which is key for businesses aiming to optimize their operations.