(5 points) If inputs increase by 32%, and outputs decrease by 20%, what is the p
ID: 399428 • Letter: #
Question
(5 points) If inputs increase by 32%, and outputs decrease by 20%, what is the percentage change in productivity? I. (10 points) Suppose that a firm is considering opening a plant on the moon, and the current exchange rate is 580 moon pieces (mp) per dollar. Also, the wage rate is 9,280 mp per hour. Suppose further that U.S. workers can producc 220 units per hour, while workers on the moon are expected to be able to produce 300 units per hour (the lower gravity level helps them work faster) 2. a. What is the "relative" wage rate (in dollars, rounded to the nearest penny) of operating on the moon, after taking productivity differences into account? b. Suppose that the U.S. wage rate is $13.50 per hour. If the U.S. managers want to become the location of choice for production, and if they cannot lower their wage rate due to labor union agreements, what does the labor productivity in the U.S. need to become (rounded to one decimal place)?Explanation / Answer
1.
Productivity = output/input
Increase in input = 32%
Decrease in output = 20%
Then,
% change in productivity = (1-20%)/(1+32%) - 1
% change in productivity = -39.39%
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