Chapter 1: Productivity
The production manager at ABC Mills, can currently expect his operation to produce 1,000 square yards of fabric for each ton of raw cotton. Each ton of raw cotton requires 5 labor—hours to process. He believes that he can buy better quality raw cotton, which will enable him to produce 1,200 square yards per ton of raw cotton with the same labor-hours.
What is the productivity growth (measured in square yards per labor-hour) if he purchases the higher quality raw cotton?