Allocation of Labor Between Two Fields

The concept of marginal productivity is central to economists' understanding of efficient allocation of resources. For an illustrative example, consider a farmer who has two fields to plant. He can grow a crop of corn (let's say) on each of them, but has a limited amount of labor to allocate between them. Let us say that the farmer can spend 1000 hours of labor, total, on the two fields. If he spends one more hour of labor on the north field, that means he has one hour less to spend on the south field.

Here are the production functions for the two fields.

Table 2

Labor Input and Output on Two Fields
North Field South Field
labor output labor output
0 0 0 0
100 9500 100 12107
200 18000 200 23429
300 25500 300 33964
400 32000 400 43714
500 37500 500 52679
600 42000 600 60857
700 45500 700 68250
800 48000 800 74858
900 49500 900 80679
1000 50000 1000 85715

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