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 46 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 a checker and bagger and one lane left empty.

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


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.

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

  • Do not use the fifth lane.



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

a. Since there are 2 lanes with 4 employees so each lane will have 1 checker and 1 bagger. So Number of customer per lane per hour = 46

So total customers per hour = 46 * 2 = 92

Average Productivity = 92/4 = 23 customers per hour per worker

b) The best way to reallocate would be 1 lane having 1 checker and a bagger and 2 lanes having 1 checker each.

Total customers per hour = 46 + 25*2 = 96

Average Productivity = 96/4 = 24

c) If there are total 4 lanes, then there should be 1 employee in each lane.

Total customers per hour = 25*4 = 100

Average Productivity = 100/4 = 25

d) If there are 5 lanes, then 1 lane will be empty and cannot be used.

So Total customers per hour = 25*4 = 100

Average Productivity = 100/4 = 25

e) The output is increasing with every addition except the fifth lane. So the correct option is

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

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Rahul Sunny answered 2 years ago
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