A fish facility produces 50,000 frozen fish packs each month utilizing labor and equipment. The equipment will remain usable for two years with a total cost of OR 4,000 over two years. The annual labor cost is OR 6,000.
a) What are the inputs and output and their values.
b) Calculate the multifactor productivity over a 2 year period.
c) The management has the option of buying new equipment, with a working life of two years and a total cost of OR 7,000. It would reduce labor costs to OR 4,000 per year. Should management purchase the new equipment? Justify your answer.