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d. If the firm's goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $26 per hour, $36 per hour, or $49 per hour? 2$ e. By contrast, which salary maximizes the productivity of the car dealer's workers (cars sold per worker per day)? 2$

d. If the firm's goal is to maximize the efficiency of its labor expenditures, which of the three hourly salary rates should it use: $26 per hour, $36 per hour, or $49 per hour? 2$ e. By contrast, which salary maximizes the productivity of the car dealer's workers (cars sold per worker per day)? 2$

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 4.6IP
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D and E

### Scenario Analysis: Car Dealership Efficiency Wages **Context:** A car dealership is evaluating whether increasing wages can improve salespeople's productivity. Initially, each salesperson sells two cars per day, earning $26 per hour for an 8-hour day. #### Instructions **Note:** Enter your answers as whole numbers. #### Question A: - **What is the current labor cost per car sold?** Calculate the current daily income (8 hours x $26/hour) and divide by the average number of cars sold (2). **Answer Box:** $ ___ #### Question B: - **Suppose that when labor wages increase to $36 per hour, the average number of cars sold increases to 4 per day. What is the new labor cost per car sold?** Calculate the daily income (8 hours x $36/hour) and divide by the new average car sales (4). **Answer Box:** $ ___ - **By how much is it higher or lower than it was before?** Select whether it's higher or lower and input the difference. **(Click to select)** by $ ___ - **Has the firm's labor expenditure efficiency (cars sold per dollar of wages) increased or decreased?** **(Click to select)** #### Question C: - **If the wage increases again to $49 per hour, and cars sold rise to an average of 5 per day, what is the labor cost per car sold?** Calculate the new daily income (8 hours x $49/hour) and divide by 5. **Answer Box:** $ ___ #### Question D: - **For efficiency maximization in labor expenditure, which salary should the firm use: $26/hour, $36/hour, or $49/hour?** Calculate cars sold per dollar of wages to determine the optimal rate. **Answer Box:** $ ___ #### Question E: - **Which salary maximizes worker productivity in terms of cars sold per worker per day?** Identify which scenario yields the highest car sales per day. **Answer Box:** $ ___ This exercise encourages analysis on optimizing wages for productivity and efficiency in sales.
Transcribed Image Text:### Scenario Analysis: Car Dealership Efficiency Wages **Context:** A car dealership is evaluating whether increasing wages can improve salespeople's productivity. Initially, each salesperson sells two cars per day, earning $26 per hour for an 8-hour day. #### Instructions **Note:** Enter your answers as whole numbers. #### Question A: - **What is the current labor cost per car sold?** Calculate the current daily income (8 hours x $26/hour) and divide by the average number of cars sold (2). **Answer Box:** $ ___ #### Question B: - **Suppose that when labor wages increase to $36 per hour, the average number of cars sold increases to 4 per day. What is the new labor cost per car sold?** Calculate the daily income (8 hours x $36/hour) and divide by the new average car sales (4). **Answer Box:** $ ___ - **By how much is it higher or lower than it was before?** Select whether it's higher or lower and input the difference. **(Click to select)** by $ ___ - **Has the firm's labor expenditure efficiency (cars sold per dollar of wages) increased or decreased?** **(Click to select)** #### Question C: - **If the wage increases again to $49 per hour, and cars sold rise to an average of 5 per day, what is the labor cost per car sold?** Calculate the new daily income (8 hours x $49/hour) and divide by 5. **Answer Box:** $ ___ #### Question D: - **For efficiency maximization in labor expenditure, which salary should the firm use: $26/hour, $36/hour, or $49/hour?** Calculate cars sold per dollar of wages to determine the optimal rate. **Answer Box:** $ ___ #### Question E: - **Which salary maximizes worker productivity in terms of cars sold per worker per day?** Identify which scenario yields the highest car sales per day. **Answer Box:** $ ___ This exercise encourages analysis on optimizing wages for productivity and efficiency in sales.
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