Question

Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople's productivity. Currently, each salesperson sells an average of 1 car per day while being paid $26 per hour for an 8-hour day. a. What is the current labor cost per car sold? per car b.Suppose that when the dealer raises the price of labor to $36 per hour the average number of cars sold by a salesperson increases to 2 per day. What is now the labor cost per car sold? per car Instructions: Enter only positive numbers. By how much is it higher or lower than it was before? The labor cost is((click to select)by per car

Answer 1

Solution:-

(a). Current labor cost of selling a car = 20 * 8 / 1 Car
= $80

(b). Labor cost when wage = 36
= 36 * 8 / 2 cars
= $144

Labor cost is Lower by = $208 - $144
= $64

Efficiency of labor increased = 1 / 208 = 0.0048
= 1 / 144 = 0.0069

(c).Labor cost when wages is 49
= 49 * 8 / 2.5
= 392 / 2.5
= 156.8

(d). Use $36 per hour $144 per car.
(e). $ 156.8 per car maximizes the productivity