Problem 5) (25 points)

As part of a study for the Department of Labor Statistics, you are assigned the task of evaluating the improvement in productivity of small businesses. Data for one of the small businesses you are to evaluate are shown at right. The data are the monthly average of last year and the monthly average this year. Determine the multifactor productivity with dollars as the common denominator for:

a) Last year.

b) This year.

c) Then determine the percent change in productivity for the monthly average last year versus the monthly average this year on a multifactor basis.

Labor: $10 per hour

Capital: 2% per month of investment

Energy: $1 per BTU

	Last Year	This Year
Production (dozen)	1,500	1,500
Labor (hours)	350	325
Capital Investment ($)	15,000	18,000
Energy (BTU)	3,500	2,700