Lillian Fok is president of Lakefront Manufacturing, a producer of bicycle tires. Fok makes 1,000 tires per day with the following resources:
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Labor:
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400 hours per day @ $12.50 per hour
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Raw Material:
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20,000 pounds per day @ $1 per pound
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Energy:
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$5,000 per day
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Capital costs:
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$10,000 per day
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a) What is the labor productivity per labor-hour for these tires at Lakefront Manufacturing?
b) What is the multifactor productivity for these tires at Lakefront Manufacturing?
c) What is the percent change in multifactor productivity if Fok can reduce the energy bill by $1,000 per day without cutting production or changing any other inputs?