A factory produces 10,000 desk staplers each week. The equipment used costs $50,000 and will remain productive for three years. The labor cost per year is $180,000.

a. What is the productivity measure of “units of output per dollar of input” averaged over the three-year period?

b. We have the option of buying $80,000 of new equipment, with an operating life of six years.

It would reduce labor costs to $104,000 per year. Should we consider purchasing this equipment (using productivity arguments alone)?