Suppose that a car dealership wishes to see if efficiency wages will help improv

Question

Suppose that a car dealership wishes to see if efficiency wages will help improve its salespeople’s productivity. Currently, each salesperson sells an average of one car per day while being paid $20 per hour for an eight-hour day.

a. What is the current labor cost per car sold? $_______ per vehicle

b. Suppose that when the dealer raises the price of labor to $30 per hour, the average number of cars sold by a salesperson increases to two per day.

What is now the labor cost per car sold? $______ per vehicle

By how much is it higher or lower than it was before? $_______ (higher/lower) per vehicle

Explanation / Answer

A. (20*8)/1=160 B. (30*8)/2=120 40 lower than before Hope this helps

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