PROBLEM SET ON PRODUCTION

1) “Productivity refers to a ratio of output (goods and services) produced per unit of input (productive resources) over some time period.”
a) The Tanner factory and the Thacker factory both make baseball gloves. Both factories have the same kind of equipment and both employ 200 workers. Last month, the Tanner factory produced 5,000 baseball gloves in 20 working days, while the Thacker factory produced 4,000 gloves in the same time period. What was the output per worker per day in each factory? What factory was more productive, assuming equal quality?
b) Suppose a factory could produce either stereos or VCRs. The table below could represent the combinations of these two products that could be produced from the firm’s resources if the firm is using its resources most efficiently. Draw a production possibilities frontier from this information.
Production Combinations
Combination Stereos VCR sets
A 900 0
B 600 100
C 300 200
D 0 300
c)A farmer is trying to decide whether to grow 800 orange trees or 400 apple trees. The farmer could grow some of each. In the fall, the farmer expects to harvest an average of twenty oranges or ten apples per tree. Therefore, if the farmer only grew oranges, the farmer could expect to harvest 16000 oranges a day (800 oranges X 20 oranges/tree. If the farmer only grew apples, the farmer could expect to grow 4000 (400 apples X 10 apples/tree). What are 4 different production combinations for the farmer? Draw a line graph to represent them.

2) “The quality of labor resources (known as human capital) can be improved through investments in education, training, and health care.”
For a selected group of occupations, such as police officer, auto worker, secretary, or doctor, students will describe how different levels of education and training contribute to the value of goods or services these workers provide and to the income differentials for these occupations. Students will analyze the effects of health care, or the lack of it, on human capital.

3) “Although investments in capital goods and in human capital can increase productivity, such investments have significant opportunity costs and economic risks”
Students will analyze the following: Bill, the owner of a car manufacturing company, is deciding whether or not to invest in robots to build the cars. His alternatives may include providing further training to his current employees or to hiring more new employees to increase productivity. What are the opportunity costs and economic risks if he follows through on any of these decisions? What do you predict to be the rational choice? What would you do?