Productivity of any business is the key to an organization success. 

In case workers do not use the available resources and their time efficiently, they end up costing the company money. This might result in deterioration of productivity of the business despite the increase in number of workers. During the time of expansion, the Chief Executive Officer of Canadian Fabrication and Design realized that productivity of the organization declined with an increase in number of employees (Hirschey, 2008, p. 12). The Chief Executive Officer makes a decision of reducing the number of employees with an aim of increasing production. This is because he thought that the workers were lazy, or the supervisors were inefficient.

Canadian Fabrication and Design has attained its marginal product. This is the output that the company generates from one additional factor of production which is a metal worker. The decision of cracking down employees will not yield to high production levels. This is because the firm has attained its optimal production level and beyond this point it will only yield the same production or less.

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The best measure that the Chief Executive Officer of Canadian Fabrication and Design should adopt is to expand production of the firm. This will increase the marginal production level of the business and thus sustain the newly employed sheet metal workers. The Chief Executive Officer of the organization should adopt this measure as an alternative to cracking down the number of employees. It will result in success of the organization since the company will make sufficient sales (Hirschey, 2008, p. 21).

Priceless goods refers to the commodities which people hold as having non market value which makes them perfectly unsuitable for buying and selling. An example of a commodity that people view as allegedly free is prescription drugs. The various people who make drugs have the responsibility of setting reasonable prices for the medicines. This calls them to restrain the prices. People view these drugs as priceless since they are urgent that they leave companies without price which they acquire in the market (Hirschey, 2008, p. 28).

Accounting costs

The concept of accounting cost states that a company incurs expenses during production. These expenses show up in the financial statements of a company. Prescription drugs are not priceless since the company incurs expenses in the production process of their manufacture.

Explicit costs

This refers to a business cost that one can identify and account for in an easy manner. It is a direct expense which an organization or business incurs while conducting a certain activity. There are various expenses that the manufacturer of drugs incurs in the production of drugs. These are explicit costs since one can easily identify them with the final product. The final product is hence not priceless or free since manufacturer incurs costs during production.

Implicit costs

These are costs which represents a loss of opportunity in the company’s resources. During the production of prescription drugs, the company incurs depreciation on machinery which is an implicit cost. This indicates that the company loses during production of the commodity and hence it cannot be free but must have a price.

Opportunity costs

Opportunity cost is the alternative forgone in order to enjoy another good or service. Since prescription costs have a price and are not free, one incurs a cost to enjoy another good or service. If people want to enjoy another service or commodity, they have to forego the drugs. This explains that the drugs have a cost and are not free (Hirschey, 2008, p. 32).

Sunk costs

A sunk cost is a cost which one has already incurred and cannot be reversed regardless of future events. When one incurs a cost while purchasing the prescription drugs, one cannot obtain the money again since the transaction has already taken place. This clearly indicates that the commodity has a price that one incurs to access.

Work Cited

Hirschey, M. 2008. Managerial Economics.

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