Hieber Company Produces Pants That Use Two Inputs-Materials and Labour

question 131

Essay

Hieber Company produces pants that use two inputs-materials and labour.During the past quarter,1,000 units were produced,requiring 2,000 kilograms of material and 1,000 hours of labour.An engineering efficiency study commissioned by the local university revealed that Hieber Company can produce the same output of 1,000 units using either of the following two combinations of inputs:
$\begin{array}{cccc}& \text { Materials } & \text { Labour } \\\text { Combination A } & 1,750 & 875 \\\text { Combination B }& 2,000 & 750\end{array}$ The cost of materials is $2.50 per kilogram; the cost of labour is $5 per hour.
a.Compute the productivity ratio for each input of Combination A.
b.Does this represent a productivity improvement over the current use of inputs?
c.What is the total dollar value of the improvement? Classify this as a technical or input trade-off efficiency improvement.

Understand the development and organization of colonial societies in North America.

Understand empirical reasoning and its distinction from other forms of reasoning.

Identify empirical reasoning’s significance in hypothesis testing and scientific inquiry.

Recognize the open and self-corrective nature of empirical reasoning within the scientific community.

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Definitions:

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as costs for raw materials or production supplies.

Break-even Point

The production level or sales volume at which total revenues equal total costs, resulting in no profit or loss.

Variable Costs

Costs that vary directly with the level of production or the volume of output.

Fixed Costs

Costs including rent, salaries, and insurance that stay the same regardless of production or sales amounts.