Question

2) Excellent Mugs Inc. produced 1,600,000 units in 2017 at a units of output per dollar of input cost was $0.09. Its cost of input at 2017 prices that would have been used in 2016 was $20,000,000. How much did the total factor productivity (TFP) increase as a result of 2017 operations

Answer 1

the total factor productivity (TFP) increase as a result of 2017 operations is 12.5%

Step-by-step explanation:

The computation of the total factor productivity (TFP) increase as a result of 2017 operations is given below;

The Unit produced in 2016 is

= $20,000,000 x $0.09

= 1,800,000

Now

Total factor productivity increase for the year 2017 is

= (1,800,000 - 1,600,000) ÷ 1,600,000

= 12.5%

Hence, the total factor productivity (TFP) increase as a result of 2017 operations is 12.5%