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?

   • Five pickers: total bushels keep rising to 290, so each hire adds money to the orchard
   • Four pickers: they average 67.5 bushels each, worth $337.50, which is above the $250 wage
   • 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 falls to $4 and the wage falls to $200. Kira asks what happens to the best number of pickers. Which choice is right?

   • Two pickers: the lower price cuts the number hired, whatever happens to the wage
   • 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
   • Five pickers: 290 bushels at $4 earn $1,160, which is more than five wages of $1,000
4. 3.

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

   • The case cannot test it, because one orchard's platform says nothing about machines elsewhere
   • The claim is false for any machine, since the platform raised the number of pickers hired
   • The claim holds: machines raise output per picker, so the orchard needs fewer pickers for the same bushels
   • The claim fails here: capital that raised each picker's output raised hiring from three to four
5. 4.

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

   • Three pickers: with the platform the third adds $400, but the fourth adds only $300
   • 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
   • Five pickers: 390 bushels are worth $1,950, which is more than five wages of $1,650

6. 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.

7. 5.

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

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

   • Pay kept pace with output per hour until late 2024, when it suddenly fell behind it
   • 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
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
   • Supported: if output per hour rose 11 percent, each worker's extra output rose 11 percent, so pay is 6 points short
   • Not supported: the theory says pay should follow output, so a smaller rise in pay means output is overstated
   • Not supported: real hourly compensation leaves out benefits, so it understates what workers received
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 12 percent, because the index rose 11.9 points and one index point is one percent
    • About 11 percent: 11.9 points on a base of 105.1 is a rise of 11.3 percent
    • About 17 percent, which is the distance from the 2017 base of 100 up to the value of 117.0
    • 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
    • Real GDP growth for the same dates, because output per hour is a part of real GDP growth
    • 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
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
    • Average and extra output are the same number, so pay should match output per hour exactly in each case
    • Output per hour is an average; the theory's pay follows one more worker's extra output, which may be lower
    • Output per hour is the extra output of one more hour, so it equals what the theory says pay should equal