Question

A company has employed two workers A and B whose productivities are 20 units and 15 units respectively. The wage for A is K12 whilst B's is K8. Are these two employees optimally employed?

Answer 1

Answer: They are not optimally employed

Explanation:

Wage of worker A = K8

Wage of worker B = K12

Productivity of worker A = 20

Productitvity of worker B = 15

Comparing the ratios of wages to that of productivity;

Productivity ratio of the two workers;

15/20 = 0.75

Wage ratio of the two workers ;

K8/K12 = 0.67

Given the ratio outputs of both wage and productivity, the productivity ratio is greater than the wage ratio connotes that the two employees are not optimally employed.