O Levels Economics (2281)•2281/11/M/J/24

Explanation
Machinery boosts labor productivity despite fewer workers
Steps:
- Assume initial 100 workers produce 100 units of harvest.
- After change: 50 workers produce 125 units.
- Labour productivity = output per worker; initially 1 unit/worker, now 2.5 units/worker.
- Production (total harvest) rises from 100 to 125 units.
Why D is correct:
- Labour productivity is output divided by labour input; output increases 25% while labour halves, so productivity rises 150% (formula: new = 1.25 × initial / 0.5 = 2.5 × initial).
Why the others are wrong:
- A: Production increased, not decreased.
- B: Production increased, not decreased.
- C: Labour productivity increased, not decreased.
Final answer: D
Topic: Firms and production
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