Question

A company has employed two workers A and B whose productivities are 20units and 15units respectively. The wage for A is k12 whilst B's is k8. Are these two employees optimally employed?​

Answer 1

Answer:

no

Explanation:

In order to achieve optimal employment level, the ratio of productivity between employees must be equal to the ratio between their wages, e.g. an employee who is 25% more productive, should earn 25% more.

In this case, the productive ratio is 15:20 or 3:4, while the wage ratio is 8:12 or 2:3. Since the wage ratio is lower than the productivity ratio (2:3 < 3:4), the two employees are not optimally employed.