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Economics · Oct / Nov 2016 · Paper 13 · Question 14

2281Firms and production

A firm produced 200 cars a week and employed 50 workers. A fall in demand caused the firm to reduce its output to 160 cars a week and its labour force to 32. What was the percentage change in the firm's productivity?

  1. AIt fell by 20%.
  2. BIt fell by 25%.
  3. CIt increased by 20%.
  4. DIt increased by 25%.

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Correct answer: D. It increased by 25%.

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