Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 13 - Wage Determination - Problems - Page 286: 5b

Answer

${$120}$, ${$40}$ lower than before. The efficiency has increased by $33.33\%$ in cars-per-dollar.

Work Step by Step

The cost to pay a salesperson for 8 hours is now ${$240}$, and now sells two cars in that time, so the labor cost per car sold is ${$120}$, which is ${$40}$ lower than before. Efficiency (cars per dollar): At $\$20$: $\frac{1}{160}=0.00625$ cars per dollar At $\$30$: $\frac{2}{240}\approx 0.00833$ cars per dollar. Efficiency increased by $\frac{0.00833-0.00625}{0.00625}=0.3333=33.33\%$ So the efficiency increased by about $33.33\%$ in cars-per-dollar. .
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