Question

Question Set 2. For this question set, you will calculate labor productivity and multifactor productivity, both in tons of rice produced per dollar value of inputs. A Rice Manufacturer employs 65 field workers (each working 40 hours per week at a wage of $12hr) and 18 line workers (each working 40 hours per week at a wage of $22/hr). The business has capital expenses of $17,500 per week and produces 325,000 tons of rice per week. Recently, the company decided to invest on additional equipment which increased the capital expenses by 8%. Also, the number of field workers was cut short by 20% whereas line workers were 5% more recruited. Both field and line workers were given a raise of 10% and 8%, respectively. Due to the above-mentioned changes, the new system reported to have a 8% more output than the old system. You will need the following formulas: Labor productivity Multifactor productivity = After copying the table below into Excel, solve the following questions and fill the table OLD SYSTEM NEW CHANGE SYSTEM -020 Number of Fild workers Hours Totalcar fow lery Number of Line workers Totalcor forwarkan TOTAL LABOR COST Capital expenditure LABOR PRODUCTIVITY MULTIFACTOR PRODUCTIVITY SCHANGE FOR LAROR PRODUCTTITY SCHANGE FOR MULTIFACTOR PRODUCTIVITY 1. Calculate the Total Input Cost for Old and New systems (Labor cost + capital expense) (2 pts) 2 Calculate the Capital Expenditure and Output of the new system (2 pts) 3. Calculate labor productivity including all employees (line workers & field workers) for the old and new systems, in tons of output per dollar of input. (4pts) 4 Calculate the multifactor productivity (including line workers, field workers, and capital expenses) for the old and new systems, in tons of output per dollar of input. (4pts) s. Calculate the percentage changes in labor and multifactor productivity. (3pts)

Answer 1

1) input and capital cost per week if you want to calculate for year multiply with 52

old system

filed worker= 65 worker*40*12= 31200

line worker = 18 worker*40*22=15840

capital expenditure = 17500*40=700000

2) cost and output of new system

field worker= 52*40*13.2(12+10%)=27456

line worker = 19*40*23.76=18058

capital exp = 18900(17500+8%)*40=756000

output = 325000+8%=351000

3)calculations of labour productive for old system

= total labour cost/ total output

=47040/325000

=0.1445/ per unit

for new system

= 45514/351000

=0.1296/ per unit

percentage change = 0.1445-0.1296/0.1445)*100

=10.31%

4) calculations of multifactor productivity

old sytem = total cost/ total output

= 747040/325000= 2.29/ per unit

new system = 801514/351000= 2.28/per unit