A company which makes shopping carts for supermarkets and other stores freshly bought some new equipment which diminishes the labour content of jobs required to create the shopping carts. Prior to buying the new equipment, the company employed six workers, who created an average of 90 carts per hour. Workers receive $14 per hour, and machine cost was $40 for each hour. With new equipment, it was probable to transfer one of workers to another department, and equipment cost raised by $12 per hour while output raised by five carts per hour.
a. Evaluate the labour productivity under each system. Employ carts per worker per hour as the measure of labour productivity.
b. Evaluate multifactor productivity under each system. Employ carts per dollar cost (labour plus equipment) as the measure.