South Korean Company Making Bicycle Wheels with 10,000 Production Capacity Per Day

Resources Used by the South Korean Company

1. A company in South Korea makes bicycle wheels.  They make 10,000 per day with the following resources:

a) Labour:  600 hours per day at $6.50 per hour

b) Raw Material:  1,000 kilograms of rubber per day at $1 per kilogram and 1,000 kilograms of aluminum per day at $2 per kilogram

c) Energy:  $4000 per day

d) Capital costs and overhead costs:  $15,000 per day

a) What is the labour productivity per labour-hour.

b) What is the multifactor productivity for these bicycle wheels?

If energy costs can be reduced by $1000 per day what is the percent change in multifactor productivity?