|Question||The Good’n’Fresh Grocery Store has two checkout lanes and four employees. Employees are equally skilled, and all are able to either operate a register (checkers) or bag groceries (baggers). The store owner assigns one checker and one bagger to each lane. A lane with a checker and a bagger can check out 40 customers per hour. A lane with a checker only can check out 25 customers per hour. (L03)
a. In terms of customers checked out per hour, what are total output and average labor productivity for the Good’n’Fresh Grocery Store?
b. The owner adds a third checkout lane and register. Assuming that no employees are added, what is the best way to reallocate the workers to tasks? What are total output and average labor productivity (in terms of customers checked out per hour) now?
c. Repeat part b for the addition of a fourth checkout lane, and a fifth. Do you observe diminishing returns to capital in this example?