week 2 homework

The labor force of an island country consists only of four workers. There are only two industries in this

island, one producing X and the other producing Y. The following table shows the marginal products of

labor in these two industries. For example, the first worker hired in the X industry can produce 80 units

of X; the second worker can add 40 units of X to production, the third worker 20 units, and so on.

Similarly, the first worker hired in the Y industry can produce 120 units of Y, the second can add 80 units,

and so on.

X Industry Y Industry

Labor Marginal

Product of Labor

Labor Marginal

Product of Labor

First Worker 80 First Worker 120

Second Worker 40 Second Worker 80

Third Worker 20 Third Worker 60

Fourth Worker 10 Fourth Worker 40

The following table shows the marginal social benefit of producing X in terms of Y.

X

Marginal Social Benefit of X in terms

of Y

80 10

120 6

140 4

150 3

160 2