firm employs 100 workers and has 2 divisions, each in perfectly competitive markets. Division A produces tape measures and Division B produces saws. How should the firm allocate its workers to maximize efficiency?

Allocate workers between the divisions so the average cost of producing tape measures equals the average cost of producing saws.

Allocate workers to the division with the lowest marginal product of labor and divest from the other division.

Allocate workers so the marginal product of labor is the same in both divisions.

III only.

II and III only.

II only.

I only.

To begin with, we have to define the marginal product of labour. We can say that it is the change that occurs in output due to the use of one more unit of labor; thus, the marginal product of labour let us know when the labor force is more productive, which results in a higher income because it is cheaper to produce each item, and then is directly a measure of efficiency.

In this vein, if we want to maximize efficiency, we must maintain the marginal product of labour balanced in both divisions, thus , the answer is only III.

Option I is not a correct answer because the average cots of producing a product doesn't refer to the efficiency of the process. And option II does not specify to what extent workers should be moved.