A company that makes shopping carts for supermarkets and other stores recently purchased some new equipment that reduces the labor content of the jobs needed to produce the shopping carts. Prior to buying the new equipment, the company used 6 workers, who together produced an average of 90 carts per hour. Workers receive $15 per hour, and machine cost was $40 per hour. With the new equipment, it was possible to transfer one of the workers to another department, and equipment cost increased by $11 per hour, while output increased by 5 carts per hour. Comment on the changes in productivity according to the two measures. (Round your intermediate calculations to 3 decimal places and final answers to 2 decimal places.)
1. Labor productivity is increased or decreased by what %?
2. Multifactor productivity is increased or decreased by what %?

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Explanation:

a.

Before: 90 ÷ 6 = 15.00 carts per worker per hour.

After: 96 ÷ 5 = 19.20 carts per worker per hour.

b.

Before: $14 x 6 = $84 + $40 = $124; hence 90 ÷ $124 = 0.73 carts/dollar cost.

After: $14 x 5 = $70 + $51 = $121; hence 96 ÷ $121 = 0.79 carts/dollar cost.

c.

Labor productivity increased by 28.00% (4.20/15.00).

Multifactor productivity increased by 8.22% (0.06/0.73).

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )

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