Gomez Home Appliances manufactures 10,000 refrigerators every month. The company spends $2,000 on labor, $5,000 on rent, $3,000 on machinery, and $1,500 on electricity every month. It can be concluded that the multifactor productivity of the company is _____.

Question

Quizplus · Accepted Answer

Multifactor productivity is calculated by dividing the total output by the total input costs. The total input costs are $2,000 (labor) + $5,000 (rent) + $3,000 (machinery) + $1,500 (electricity) = $11,500. The total output is 10,000 refrigerators. Therefore, the multifactor productivity is 10,000 refrigerators / $11,500 = 0.87 refrigerators per dollar.

Gomez Home Appliances Manufactures 10,000 Refrigerators Every Month