Land, labor, capital and entrepreneurship

Grade 12 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Daily picking at Pell Orchard (made up)

   Pickers	Bushels a day	Extra bushels from the last picker
   1	90	90
   2	170	80
   3	230	60
   4	270	40
   5	290	20

   Note: Pell Orchard is made up. Card A: The orchard's land and ladders stay the same. A bushel sells for $5 and a picker's wage is $250 a day. Card B: A picking platform (capital) rents for $120 a day and adds 20 bushels a day for each picker who works with it. Card C: Economists say a firm hires another worker as long as the worker's extra output is worth at least the wage.

2. 1.

   Esme asks how many pickers leave Pell Orchard the most profit at card A's prices. Which choice and reason fit best?

   • Four pickers: they average 67.5 bushels each, worth $337.50, which is above the $250 wage
   • Five pickers: total bushels keep rising to 290, so each hire adds money to the orchard
   • One picker: the first adds the most, 90 bushels worth $450, so the orchard should stop there
   • Three pickers: the third adds 60 bushels worth $300, but the fourth adds 40 worth $200
3. 2.

   The price of a bushel falls to $4, with the wage still $250. Jun recomputes the best number of pickers. Which choice fits?

   • Three pickers still: the average of 76.7 bushels is worth $307 at $4, above the $250 wage
   • Four pickers: with a lower price, the orchard needs more pickers to earn the same money as before
   • Three pickers still: the bushels picked do not change, so hiring does not change either
   • Two pickers: the second adds 80 bushels worth $320, but the third adds 60 worth $240
4. 3.

   The price falls to $4 and the wage falls to $200. Kira asks what happens to the best number of pickers. Which choice is right?

   • Four pickers: the average picker adds 67.5 bushels, worth $270 at $4, which is above $200
   • Two pickers: the lower price cuts the number hired, whatever happens to the wage
   • Three pickers: the third adds $240 against a $200 wage, but the fourth adds only $160
   • Five pickers: 290 bushels at $4 earn $1,160, which is more than five wages of $1,000
5. 4.

   Luz compares Pell Orchard with and without the platform on card B, at $5 and $250. Does the platform pay, and how many pickers should work?

   • No: the platform adds $120 of cost and pays no one's wage, so profit must fall below $400
   • Yes, and fewer pickers: a platform lets pickers do more, so the orchard needs fewer of them
   • Yes, but keep three pickers: the platform adds 60 bushels worth $300, so profit rises by $180
   • Yes: the best number rises to four pickers and profit from $400 to $630 a day
6. 5.

   The orchard rents the platform, and the wage rises to $330. Noah finds the best number of pickers. Which is right?

   • Five pickers: 390 bushels are worth $1,950, which is more than five wages of $1,650
   • Four pickers: the platform's higher output means a higher wage still leaves the fourth worth hiring
   • Two pickers: without the platform the third picker adds only $300, which is below the $330 wage
   • Three pickers: with the platform the third adds $400, but the fourth adds only $300

7. Output per hour and real hourly pay, U.S. nonfarm business

   Measure (index, 2017 = 100)	Late 2019	Early 2022	Late 2024
   Output per hour	105.1	110.4	117.0
   Real hourly compensation	103.3	107.3	108.6

   Note: BLS Productivity and Costs, nonfarm business sector, as listed by FRED (series OPHNFB and COMPRNFB), retrieved Nov 14, 2026; quarterly values, indexes set to 2017 = 100. Output per hour is real output divided by hours worked by all workers. Real hourly compensation is pay and benefits per hour in constant dollars. Card B: Marginal productivity theory (in our words): in a competitive labor market a firm pays a worker about the value of the worker's extra output, so pay should follow output over time. Card C: Output per hour is an average across all workers and hours, not the extra output of one more worker. Real hourly compensation is also an average across all workers and hours.

8. 6.

   Bo splits the chart into two stretches: late 2019 to early 2022, and early 2022 to late 2024. Which statement is best supported?

   • After early 2022, output per hour rose about 6 percent while real hourly pay fell about 1 percent
   • The gap widened after early 2022: output per hour grew about 6 percent, pay about 1
   • The gap was about the same in both stretches, since both indexes rose in each of them
   • Pay kept pace with output per hour until late 2024, when it suddenly fell behind it
9. 7.

   A union leader says workers are owed the gap between 11 and 5 percent. Pia tests that against cards B and C. What is the best response?

   • Not supported: output per hour is an average, not one more worker's extra output
   • Not supported: real hourly compensation leaves out benefits, so it understates what workers received
   • Not supported: the theory says pay should follow output, so a smaller rise in pay means output is overstated
   • Supported: if output per hour rose 11 percent, each worker's extra output rose 11 percent, so pay is 6 points short
10. 8.

    Output per hour went from 105.1 to 117.0, a rise of 11.9 index points. Which statement about the size of the rise is correct, Tala asks?

    • About 17 percent, which is the distance from the 2017 base of 100 up to the value of 117.0
    • About 11 percent: 11.9 points on a base of 105.1 is a rise of 11.3 percent
    • About 12 percent, because the index rose 11.9 points and one index point is one percent
    • About 5 percent, which is the rise in real hourly pay over the same two dates on the chart
11. 9.

    A writer says the gap means employers kept the gains as profit. Zee looks for evidence that would most challenge the writer. Which is it?

    • Profits for the same dates, because a rise in profits would settle the writer's point about the gap
    • Whether the mix of workers and jobs changed, since both indexes are averages
    • How many hours the average worker worked each week, since the indexes are measured per hour
    • Real GDP growth for the same dates, because output per hour is a part of real GDP growth
12. 10.

    Card B says pay should follow the value of a worker's extra output. Ren asks how that differs from card C's output per hour. Which statement is correct?

    • Extra output is larger than average output, so pay should be above output per hour in a competitive market
    • Output per hour is an average; the theory's pay follows one more worker's extra output, which may be lower
    • Average and extra output are the same number, so pay should match output per hour exactly in each case
    • Output per hour is the extra output of one more hour, so it equals what the theory says pay should equal