Suppose that the share of population employed in Country B is 50 percent, and that Countries B and C have the same real GDP per capita. Based on the information in the table, what share of Country C's population must be employed?

Question

Quizplus · Accepted Answer

To find real GDP per person, multiply the average output each worker produces times the percentage of population employed. In this case, average labor productivity in Country B is $10,000 and share of population employed is 0.50, so real GDP per person is $5,000. For Country C to also have real GDP per person of $5,000, then the share of population working × the average labor productivity of $25,000 must be $5,000. Solving for the share of population working, by dividing each side by the real GDP, we get $5,000 / $25,000 = .20 or 20 percent.

Suppose That the Share of Population Employed in Country B