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Teaching Resources
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EconActive Solutions (CNN News Questions)
Chapter 18: Selling Orange Groves: pc3m02v1
- Because of the cold weather, what has happened to the marginal productivity of the orange groves?
- How does the change in marginal productivity of the groves affect land prices?
- How does the change in the marginal productivity of the land affect the marginal productivity of labor?
Answers:
- The marginal productivity of the orange groves has decreased tremendously because of the freezes.
- Since the value of the marginal product of the groves has decreased, demand for the land, and therefore its price, has decreased.
- If the marginal productivity of one factor, land, decreases, the marginal productivity of labor decreases. This leads to a decrease in the demand for these workers and a decrease in their wages and employment.
Chapter 18: Levi Strauss Workers: fb3m02v1
- Why did the decrease in demand for Levis result in worker lay-offs?
Answers:
- When the demand for Levis decreased, the price decreased. This decreases the value of the marginal product of the workers, which means a decrease in demand for their labor.
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