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 five workers, who produced an average of 80 carts per hour. Workers receive $10 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 $10 per hour while output increased by four carts per hour.
Compute labor productivity under each system. Use carts per worker per hour as the measure of labor productivity.
Compute the multifactor productivity under each system. Use carts per dollar cost (labor plus equipment) as the measure. (Round carts per dollar to 2 decimal places.)
Comment on the changes in productivity according to the two measures. (Round your intermediate caluclations and your final answers to 2 decimal places. Omit the "%" sign in your response.)
Answer:
a. Before: carts per worker per hour.
After: carts per worker per hour.
b. Before: carts/$1.
After: carts/$1.
c. Labor productivity (Click for List) increased decreased by %. Multifactor productivity (Click for List) decreased increased by %.