Lowest-cost combination of workers

by | Jul 27, 2021 | Homework Help

A manufacturer of lighting fixtures currently employs 100 unskilled labourers, 80 factory technicians, 30 skilled machinists, and 40 skilled electricians. It estimated that the marginal product of the last unskilled labourer is 400 lights per week, the marginal product of the last factory technician is 450 lights per week, the marginal product of the last skilled machinist is 550 lights per week, and the marginal product of the last skilled electrician is 600 lights per week. Unskilled labourers earn $400 per week, factory technicians earn $500 per week, machinists earn $700 per week, and electricians earn $750 per week.

a) Is the firm using the lowest-cost combination of workers to produce its targeted output? If not, what recommendations can you make to assist the company?

b) What additional information would you need to make your recommendation more specific, i.e. to determine the exact magnitude of the required adjustment? Answer:a. Yes, the firm is using the lowest cost of production as the number of labours of the organization is optimal and the company is focusing on using the labour as per the number of hours…

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