In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

a.

decreased by 1.7 percent between 1998 and 2008.

b.

remained unchanged between 1998 and 2008.

c.

increased by 4.75 percent between 1998 and 2008.

d.

increased by 6.25 percent between 1998 and 2008

The answer is the option D., labor productivity increased by 6.25 percent between 1998 and 2008.

Explanation

Labor productivity can be calculated with the following equation, which conforms to the data provided in the question:

P = / frac{UP}{h}

Where:

P: productivity

UP: units of output (number of products obtained by an employee)

h: hours to produce (hours spent in production)

In 1998:

P1998 = / frac{UP}{h} = / frac{40}{25} = 1.6

In 2008:

P2008 = / frac{UP}{h} = / frac{68}{40} = 1.7

In general, the percentage of increase (or decrease) can be calculated with the following equation:

POI=/frac{Vf-Vi}{Vi}x100

Applying it to the question:

POI = / frac{P2008-P 1998}{P 1998}x100 = 6.25 percent

Where:

POI: percent of increase (or decrease)

P1998: productivity in 1998 (initial value)

P2008: productivity in 2008 (final value)

The productivity of the average worker increased by 6.25 percent between 1998 and 2008