Question

11. Leonard Chang runs a barbershop in Fredericton, NB. Due to his excellent marketing skills, the sales have increased by 25% in the last quarter. The barbershop does 1200 haircuts per month. The labor productivity is about 2 haircuts per labor-hour. Each barber works 150 hours per month. How many barbers should Leonard add? The hourly pay will be $10 for barbers. Leonard is considering redesign the barbershop to increase the customer flows. The redesign entails a significant increase in the investment. The additional investment incurs a monthly cost of $240, which also leads to an increase in output to 1500 haircuts. What is the change in labor productivity in haircuts per dollar? What is the new investment productivity in haircuts per dollar? What are the percentage productivity changes for labor and investment