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O Levels Economics (2281)•2281/11/M/J/24
Question 12 from 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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