Suppose a Manager Is Deciding How to Allocate Workers Between

question 39

Multiple Choice

Suppose a manager is deciding how to allocate workers between two plants.The marginal product of labor in plant 1 is 10 units of output.The marginal product of labor in plant 2 is 14 units of labor.What should the manager do?

• A) Reallocate workers from plant 1 to plant 2, because MP_L is greater in plant 1 than in plant 2.
• B) Reallocate workers from plant 1 to plant 2, because MP_L is greater in plant 2 than in plant 1.
• C) Reallocate workers from plant 2 to plant 1, because MP_L is greater in plant 1 than in plant 2.
• D) Reallocate workers from plant 2 to plant 1, because MP_L is greater in plant 1 than in plant 1.

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Definitions:

Short-Run Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a short time period, at different possible price levels.

Money Supply

The money supply refers to the total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.

Natural Rate

Natural Rate often refers to the natural rate of unemployment, which is the level of unemployment consistent with sustainable economic growth, where inflation is stable.

Unemployment

The state of being jobless and actively looking for work.