Question

In: Economics

The Good’n’Fresh Grocery Store has two checkout lanes and four employees. Employees are equally skilled, and...

The Good’n’Fresh Grocery Store has two checkout lanes and four employees. Employees are equally skilled, and all are able to either operate a register (checkers) or bag groceries (baggers). The store owner assigns one checker and one bagger to each lane. A lane with a checker and a bagger can check out 41 customers per hour. A lane with a checker only can check out 25 customers per hour.


a. In terms of customers checked out per hour, what are total output and average labor productivity for the Good’n’Fresh Grocery Store?

Instructions: Enter your response for total output as a whole number and round your response for average productivity to one decimal place.


Total output:    customers per hour.

Average productivity:    customers per hour, per worker


b.  The owner adds a third checkout lane and register. Assuming that no employees are added, what is the best way to reallocate the workers to tasks?

  • Two lanes with only checkers and one lane with a checker and a bagger.

  • Two lanes with a checker and bagger and one lane left empty.


Instructions: Enter your response for total output as a whole number and round your response for average productivity to one decimal place.

What are total output and average labor productivity (in terms of customers checked out per hour) now?

Total output:    customers per hour

Average productivity:    customers per hour, per worker

c. The owner adds a fourth checkout lane and register. Assuming that no employees are added, what is the best way to reallocate the workers to tasks?
     

  • Two lanes with one checker and one bagger each.

  • Do not use the fourth lane.

  • Four lanes with checkers only.


Instructions: Enter your response for total output as a whole number and round your response for average productivity to one decimal place.

Total output:    customers per hour

Average productivity:    customers per hour

     
The owner adds a fifth checkout lane and register. Assuming that no employees are added, what is the best way to reallocate the workers to tasks?

  • Two lanes with only checkers and one lane with a checker and a bagger.

  • Do not use the fifth lane.

  • Two lanes with one checker and one bagger at each.



Do you observe diminishing returns to capital in this example?

  • No, adding all five lanes will increase output.

  • Yes, adding a fourth lane will not increase output

  • Yes, adding a fifth lane will not increase output.

  • Yes, adding a third lane will not increase output

Solutions

Expert Solution

The Good’n’Fresh Grocery Store has two checkout lanes and four employees.The store owner assigns one checker and one bagger to each lane. A lane with a checker and a bagger can check out 41 customers per hour. A lane with a checker only can check out 25 customers per hour.

a. Total output:

As there are two both have one checker and one bagger then each lane output is 41 customers per hour. So total output= 41+41= 82 customers per hour.

Average Productivity= Total output / Number of employees = 82/4= 20.5 customers per hour, per worker.

b. The owner adds a third checkout lane and register without adding any new labor:

There can be two ways to allocate labor:

  • Two lanes with only checkers and one lane with a checker and a bagger.

In this situation, Total output= (25+25)(lane with only checkers)+41 ( lane with both checker and bagger)= 91

Average productivity= 91/4 = 22.7 customers per hour, per worker.

  • Two lanes with a checker and bagger and one lane left empty.

In this situation total output= 41+41= 82

Average Productivity= Total output / Number of employees = 82/4= 20.5 customers per hour, per worker.

Best way to allocate is Two lanes with only checkers and one lane with a checker and a bagger.


c. The owner adds a fourth checkout lane and register. Assuming that no employees are added. Now there can be three cases:

  • Two lanes with one checker and one bagger each.

In this situation total output= 41+41= 82

Average Productivity= Total output / Number of employees = 82/4= 20.5 customers per hour, per worker.

  • Do not use the fourth lane.

Two lanes with only checkers and one lane with a checker and a bagger.

In this situation, Total output= (25+25)(lane with only checkers)+41 ( lane with both checker and bagger)= 91

Average productivity= 91/4 = 22.7 customers per hour, per worker.

  • Four lanes with checkers only.

In this situation, Total output= (25+25+25+25)(lane with only checkers)=100

Average productivity= 100/4 = 25 customers per hour, per worker.

Here best way is to use checker only in all four lane.

The owner adds a fifth checkout lane and register. Assuming that no employees are added. The cases are:

  • Two lanes with only checkers and one lane with a checker and a bagger.

In this situation, Total output= (25+25)(lane with only checkers)+41 ( lane with both checker and bagger)= 91

Average productivity= 91/4 = 22.7 customers per hour, per worker.

  • Do not use the fifth lane.

Only checkers in all lane=

In this situation, Total output= (25+25+25+25)(lane with only checkers)=100

Average productivity= 100/4 = 25 customers per hour, per worker.

  • Two lanes with one checker and one bagger at each.

In this situation total output= 41+41= 82

Average Productivity= Total output / Number of employees = 82/4= 20.5 customers per hour, per worker.

The best way to allocate is to use checker only in all four lane.

Yes, adding a fifth lane will not increase output. Output remain same at 100.

Rahul Sunny answered 1 hour ago
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