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.

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

   • Four pickers: with a lower price, the orchard needs more pickers to earn the same money as before
   • Three pickers still: the average of 76.7 bushels is worth $307 at $4, above the $250 wage
   • Two pickers: the second adds 80 bushels worth $320, but the third adds 60 worth $240
   • Three pickers still: the bushels picked do not change, so hiring does not change either
3. 2.

   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
   • Three pickers: the third adds $240 against a $200 wage, but the fourth adds only $160
   • Two pickers: the lower price cuts the number hired, whatever happens to the wage
   • Five pickers: 290 bushels at $4 earn $1,160, which is more than five wages of $1,000
4. 3.

   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?

   • Yes: the best number rises to four pickers and profit from $400 to $630 a day
   • Yes, but keep three pickers: the platform adds 60 bushels worth $300, so profit rises by $180
   • Yes, and fewer pickers: a platform lets pickers do more, so the orchard needs fewer of them
   • No: the platform adds $120 of cost and pays no one's wage, so profit must fall below $400
5. 4.

   A neighbor says machines always cut hiring. Milo tests that against Pell Orchard. Which conclusion is best?

   • The claim holds: machines raise output per picker, so the orchard needs fewer pickers for the same bushels
   • The case cannot test it, because one orchard's platform says nothing about machines elsewhere
   • The claim fails here: capital that raised each picker's output raised hiring from three to four
   • The claim is false for any machine, since the platform raised the number of pickers hired
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.

   Ari tests card B's theory against the chart from late 2019 to late 2024. Which verdict is best?

   • The theory is refuted, because pay would have to rise exactly as much as output per hour does
   • The theory holds well, because real pay rose about 5 percent, so workers shared in the gains
   • The theory holds, because both indexes rose between each of the dates shown on the chart
   • Pay rose about 5 percent against about 11 for output per hour: only a loose fit
9. 7.

   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 was about the same in both stretches, since both indexes rose in each of them
   • The gap widened after early 2022: output per hour grew about 6 percent, pay about 1
   • Pay kept pace with output per hour until late 2024, when it suddenly fell behind it
10. 8.

    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: the theory says pay should follow output, so a smaller rise in pay means output is overstated
    • Not supported: output per hour is an average, not one more worker's extra output
    • Supported: if output per hour rose 11 percent, each worker's extra output rose 11 percent, so pay is 6 points short
    • Not supported: real hourly compensation leaves out benefits, so it understates what workers received
11. 9.

    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 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
    • About 17 percent, which is the distance from the 2017 base of 100 up to the value of 117.0
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?

    • 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
    • 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