Question

Workland has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods. Laborland has a population of 5,000, of whom 3,000 work 7 hours a day to produce a total of 105,000 final goods:______

a. Workland has higher productivity and higher real GDP per person than Laborland.
b. Workland has higher productivity but lower real GDP per person than Laborland.
c. Workland has lower productivity but higher real GDP per person than Laborland.

Answer 1

c. Workland has lower productivity but higher real GDP per person than Laborland.

Step-by-step explanation:

a) Data and Calculations:

Workland Laborland

Population 10,000 5,000

Working population 7,000 3,000

Labor force % 70% 60%

Labor input 56,000 hrs 21,000 hrs

Workland output 224,000 105,000

Productivity = 224,000/56,000 105,000/21,000

= 4 5

Output per person 22.4 21

= 224,000/10,000 and 105,000/5,000

b) The productivity of Workland and Laborland expressed as the ratio of output volume to the labor input shows that for Workland, for every hour of labor input, there is 4 output, and for Laborland, for every hour of labor input, there is 5 output. Laborland, therefore, has higher productivity than Workland. However, Workland enjoys higher real GDP per person than Laborland because whereas, Workland produces output of 22.4 per person, Laborland only produces 21 per person.