Question

Lilian Fok is president of Lakefront Manufacturing, a producer of bicycle tites Fok makes 1,000 tires per day with the following resources: Labor 400 hours per day @ $12.50 per hour Raw Material 21,000 pounds per day @ 51,00 per pound Energy 55,000 per day Capital $10,000 per day a) Labor productivity per labor hour for these tires = 2.5 tires/labor hour (round your response to two decimal places). b) Multifactor productivity for these tires = 0.0244 tires/dollar (round your response to four decimal places) c) The percent change in multifactor productivity Fok can reduce the energy bill by $950 per day without cutting production or changing any other inputs - % (enter your response as a percentage rounded to two decimal places) Note: calculate the new multifactor productivity to four decimal places before calculating the percentage change

Answer 1

We have to find the change in multifactor productivity i.e. part c)

Current multifactor productivity for these tires from part b) = 0.0244

New multifactor productivity = Output / New input = 1000 / (400 * 12.5 + 21000 * 1 + (5000 - 950) + 10000) = 1000 / 40050 = 0.0250

Hence, Change in multifactor productivity = (New - Current) *100 / Current = (0.0250 - 0.0244) * 100 / 0.0244 = 2.46%

Answer: 2.46%

-----------------------------------------------------------------------------------------------------------------------

In case of any doubt, please ask through the comment section before Upvote/downvote.

If you liked the answer, please give an upvote. This will be quite encouraging for me, thank-you!!!