Consider a division of Miller Chemicals that produces water purification crystals for swimming. The major inputs used in the production process are labor, raw materials, and energy. For year 1, the labor costs are $280,000; raw materials cost $30,000; and energy cost amount to $15,000. Labor costs for Year 2 are $320,000; raw materials cost $40,000; and energy costs amount to $9,000. Miller chemicals produced 100,000 pounds of crystal in Year 1 and 150,000 pounds of crystal in Year 2.
a) What is the multi-factor productivity for Miller Chemicals in Years 1 and 2?
b) What is the percentage change in productivity?