Asked by Jasmine Queen-O'Connell on Jun 26, 2024
Verified
Swing shift
Your firm prints the novelty baseball cards that candy makers include in their bubblegum.Since you regularly sell 100,000 cards per week,you invested in four separate production lines that can each produce 25,000 cards in a standard 40 hour work week.Now a few of the candy makers are increasing their orders so that you will need to produce 150,000 cards per week,at least temporarily.If you produce these cards by adding a swing shift from 4pm to midnight,you will have to pay workers time and a half.What does this imply for the shape of your short-run marginal cost curve? What does it imply for your pricing?
Short-Run Marginal Cost
The increase in cost incurred from producing one additional unit of a good or service in the short term, when some inputs or resources are fixed.
Swing Shift
A work shift that typically occurs in the afternoon and evening hours, bridging the gap between day and night shifts.
Time And A Half
An overtime pay rate that is 1.5 times an employee's normal hourly rate, typically paid for work done beyond standard working hours.
- Analyze the effects of swing shifts on short-run marginal cost and pricing strategies.
- Assess the impact of scaling production and variations in labor expenses on the total costs and pricing within the manufacturing industry.
Verified Answer
SB
Simran BhinderJun 26, 2024
Final Answer :
Since this increase in production may be temporary,it may not pay to invest in additional production lines.By adding another shift,your labor is more expensive implying that your short-run marginal costs are rising.This means that you must increase prices just to maintain your price-cost margins.
Learning Objectives
- Analyze the effects of swing shifts on short-run marginal cost and pricing strategies.
- Assess the impact of scaling production and variations in labor expenses on the total costs and pricing within the manufacturing industry.