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Determining a Firm's Multifactor Productivity

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The Dulac Box plant produces wooden packaging boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8-hour shifts (250 boxes per shift). The company has introduced some moderate changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. Labor costs average $10 per hour for each of the 5 full-time workers on each shift. Capital costs were previously $3000 per day, and rose to $3200 per day with the equipment modifications. Energy costs were unchanged by the modifications, at $400 per day. Prepare a 3-4 page APA formatted research paper that responds to the question:

What is the firm's multifactor productivity before and after the changes?

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This solution provides assistance with determining a firm's multifactor productivity.

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Before you answer this question the first thing you may want to do is note the definition of productivity; as well as you may want to note what is single factor productivity as opposed to multifactor productivity - and how both are calculated. (Note before reading further that this response will assist you with how to proceed with your research paper).

In order for a company to create either goods and services, it requires them to change resources into goods and services. These resources may include a mixture of material, labor, equipment or machines and/or capital. The more efficiently that company is able to use these resources to make a change, the more productive they will be and more value will be added to the good or service. Productivity is often defined as the ratio of outputs (meaning goods and/or services) divided by the inputs (which may include resources such as those mentioned earlier). It is generally given as follows:

Productivity = Units produced (Output) / Inputs used (Labor or Capital or Material)

This measure basically highlights how well a company uses ...

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