a)
MFP before buying the new equipment = Output / Input
= 82 carts per hour / (4 workers * $ 11 + $ 52)
= 82/(4*11+52)
= 0.8542 carts/$
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b)
After buying the new equipment,
Output = 82+4 = 86 carts per hour
Workers = 4-1= 3
Equipment cost = 52+16 = $ 68
Labor cost = 3*11 = $ 33
Input (labor plus equipment cost) = 33+68 = $ 101
Output MFP after buying the new equipment = Output / Input
= 86/101
= 0.8515
Growth in productivity = (MFP after - MFP before) / MFP before
= (0.8515 - 0.8542) / 0.8542
= -0.32 % (minus sign indicates degrowth in MFP)
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