50.1K

Verified Solution

Link Copied!

Gammaro Compary manufactures wallets from fabric. In $2019,$ Gammaro made $2,150,000$ wallets using $1,250,000$ yards of fabric. In $2019,$ Gammaro has capacity to make $2,800,000$ wallets and incurs a cost of $$8,800,000$ for this capacity. In $2020,$ Gemmero plans to make $2,408,000$ walets, make fabric use more efficient, and reduce capacity. Suppose that in $2020$ Gammaro makes $2,408,000$ wallets, uses $1,505,000$ yards of fabric, and reduces capacity to $2,408,000$ wallets at a cost of $$8,668,800.$ Assume the fabric costs $$4\mathrm{.}60$ per yard in $2020$ and $$4\mathrm{.}80$ per yard in $2018.$

Reed the requirements.

To assist you, use the popup to identily the various components of the formula.

$($Click to view the components you will use in your formulas.$)$

Determine the formula for the total factor productivity $($TRP$)$ for $2020,$ then calculate the ratio. $($Round the ratio to four decimal places.$)$

$\backslash$table$[[+,=,$TFP for $2020$ using $2020$ prices$],[+[,=,$units of output per dollar of input$]]$

Requirement $2.$ Compare TFP for $2020$ with a benchmark TFP for $2019$ inputs based on $2020$ prices and output.

To assist you, use the popup to identify the various components of the formula.

$($Click to view the components you will use in your formulas.$)$

Begin by determining the formula used to calculate the benchmark TFP for $2019$ inputs based on $2020$ output, then complete the calculation. $($Round the ratio to four decimal places.$)$

$\backslash$table$[[+,=,$Benchmark TFP$],[4||,=,$units of output per dollar of input$]]$

$($Round the percentage to the nearest tenth percent, XX$\%.)$

The total factor productivity $$ by $\%$ from $2019$ to $2020.$

Requirement $3.$ What additional information does TFP provide that partial productivity measures do not?

A major advantage of TFP over partial productivity measures is that TFP $$ and so measures gains from using fewer physical inputs and substitution among inputs. Partial productivities be combined to indicate the overall effect on cost as a result of these individual improvements:

Answer & Explanation Solved by verified expert

See Answer