Question: It takes the Kwinzee shipyard six months with 500 workers to build a small tanker. Material costs are $32 million and overhead costs are $2 million. Workers cost $40 per hour including benefits and work 40 hours per week. The ship sells for $75 million.

a) What is the multifactor productivity ratio?

b) There is a new contract for next year, requiring the shipyard to build a ship within 4 months. If 50 new workers are added to the workforce and shifts extend from 8 hours to 10, does the labor productivity increase, decrease, or remain the same? If it changes, by what percentage it will change?