week 2 homework

The labor force of an island country consists only of five 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 1 unit of X; the second worker can also add 1 unit of X to production, the

third worker 1 unit, and so on. Similarly, the first worker hired in the Y industry can produce 20

units of Y; the second can add 16 units; and so on.

X Industry Y Industry

Labor Marginal

Product of Labor

Labor Marginal

Product of Labor

First Worker 1 First Worker 20

Second Worker 1 Second Worker 16

Third Worker 1 Third Worker 12

Fourth Worker 1 Fourth Worker 8

Fifth Worker 1 Fifth Worker 4

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

1 28

2 24

3 20

4 16

5 12