Question

Which of the following is NOT true of capital productivity? a. Changing the way a firm handles inventory to reduce capital expenditures can increase capital productivity. b. Higher capital productivity is achieved by eliminating unproductive assets or activities from a firm’s capital. c. It is an important measure of efficiency. d. It is the output produced by a dollar of capital invested in the business. e. It is measured by looking at a product's price.

Answer 1

Answer:

b. It is measured by looking at a product's price.

Explanation:

Remember, Capital productivity measures how well (efficient) physical capital is used in the entire process of providing goods and services.

Thus, it is inaccurate to conclude that capital productivity can be measured by looking at a product's price because even a product with a low price may not necessarily have been a result of efficient capital use.