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Productivity measures also can be used to judge the performance of an entire industry or the productivity of a country as a whole. These productivity measures are aggregate measures. In essence, productivity measurements serve as scorecards of the effective use of resources. Business leaders are concerned with productivity as it relates to competitiveness. If two firms both have the same level of output but one requires less input because of higher productivity, that one will be able to charge a lower price and consequently increase its share of the market. Or that firm might elect to charge the same price, thereby reaping a greater profit. Gov- ernment leaders are concerned with national productivity because of the close relationship between productivity and a nation's standard of living. High levels of productivity are largely responsible for the relatively high standards of living enjoyed by people in industrial nations. Furthermore, wage and price increases not accompanied by productivity increases tend to cre- ate inflationary pressures on a nation's economy. READING Why Productivity Matters competitors gives them a competitive advantage in the market- place. With a higher productivity, they can afford to undercut com- petitors' prices to gain market share, or charge the same prices but realize greater profits! For an industry, higher relative produc- tivity means it is less likely to be supplanted by foreign industry. It is sometimes easy to overlook the importance of productiv- ity. National figures are often reported in the media. They may seem to be ho-hum; there's nothing glamorous about them to get our attention. But make no mistake; they are key economic indicators-barometers, if you will, that affect everybody. How? High productivity and high standard of living go hand-in-hand. If a country becomes more service-based, as the United States has become, some (but not all) high-productivity manufacturing jobs are replaced by lower-productivity service jobs. That makes it more difficult to support a high standard of living. Productivity levels are also important for industries and com- panies. For companies, a higher productivity relative to their Questions 1. Why is high productivity important for a nation? 2. Why do you suppose that service jobs have lower productivity than manufacturing jobs? 3. How can a company gain a competitive advantage by having higher productivity than its competitors have