Chapter 1 Assignment 1
Exercise 1: Bakery Production
2022:
o Total labor hours: 10 bakers * 8 hours/day * 250 days = 20,000
hours
o Labor productivity: 50,000 loaves / 20,000 hours = 2.5 loaves/hour
o Total cost of inputs: (20,000 hours * $20/hour) + (2,000 kg * $2/kg)
= $404,000
o Total-factor productivity: 50,000 loaves / 404,000=0.124loaves/
2023:
o Total labor hours: 20,000 hours (same as 2022)
o Labor productivity: 60,000 loaves / 20,000 hours = 3 loaves/hour
o Total cost of inputs: (20,000 hours * $20/hour) + (2,500 kg * $2/kg)
= $405,000
o Total-factor productivity: 60,000 loaves / 405,000=0.148loaves/
Exercise 2: Furniture Manufacturing
2022:
o Total labor hours: 50 workers * 40 hours/week * 52 weeks =
104,000 hours
o Labor productivity: 10,000 chairs / 104,000 hours = 0.096
chairs/hour
o Total cost of inputs: (104,000 hours * $25/hour - assumed) +
$50,000 = $2,650,000
o Total-factor productivity: 10,000 chairs / 2,650,000=0.0038chairs/
2023:
o Total labor hours: 40 workers * 40 hours/week * 52 weeks = 83,200
hours
o Labor productivity: 12,000 chairs / 83,200 hours = 0.144 chairs/hour
o Total cost of inputs: (83,200 hours * $25/hour - assumed) + $60,000
= $2,140,000
o Total-factor productivity: 12,000 chairs / 2,140,000=0.0056chairs/
Exercise 3: Garment Factory
2022:
o Total labor hours: 100 workers * 40 hours/week * 50 weeks =
200,000 hours
o Labor productivity: 200,000 shirts / 200,000 hours = 1 shirt/hour
o Total machine hours: 20 machines * 2000 hours/machine = 40,000
hours
o Machine productivity: 200,000 shirts / 40,000 hours = 5 shirts/hour
o Total cost of inputs: (200,000 hours * $15/hour) + (40,000 hours *
$50/hour) = $5,000,000
o Total-factor productivity: 200,000 shirts / 5,000,000=0.04shirts/
2023:
o Total labor hours: 120 workers * 40 hours/week * 50 weeks =
240,000 hours
o Labor productivity: 300,000 shirts / 240,000 hours = 1.25 shirts/hour
o Total machine hours: 25 machines * 2000 hours/machine = 50,000
hours
o Machine productivity: 300,000 shirts / 50,000 hours = 6 shirts/hour
o Total cost of inputs: (240,000 hours * $15/hour) + (50,000 hours *
$50/hour) = $6,100,000
o Total-factor productivity: 300,000 shirts / 6,100,000=0.049shirts/
Exercise 4: Software Development
2022:
o Total developer hours: 10 developers * 2000 hours = 20,000 hours
o Team productivity: 5 projects / 20,000 hours = 0.00025
projects/hour
o Total cost of inputs: (20,000 hours * $50/hour - assumed) + $10,000
= $1,010,000
o Total-factor productivity: 5 projects /
1,010,000=0.00000495projects/
2023:
o Total developer hours: 20,000 hours (same as 2022)
o Team productivity: 7 projects / 20,000 hours = 0.00035
projects/hour
o Total cost of inputs: (20,000 hours * $50/hour - assumed) + $12,000
= $1,012,000
o Total-factor productivity: 7 projects /
1,012,000=0.00000692projects/
Exercise 5: Call Center
2022:
o Total operator hours: 50 operators * 40 hours/week * 50 weeks =
100,000 hours
o Operator productivity: 100,000 calls / 100,000 hours = 1 call/hour
o Total cost of inputs: (100,000 hours * $12/hour) + $20,000 =
$1,220,000
o Total-factor productivity: 100,000 calls / 1,220,000=0.082calls/
2023:
o Total operator hours: 100,000 hours (same as 2022)
o Operator productivity: 120,000 calls / 100,000 hours = 1.2 calls/hour
o Total cost of inputs: (100,000 hours * $12/hour) + $25,000 =
$1,225,000
o Total-factor productivity: 120,000 calls / 1,225,000=0.098calls/
