Imagine that there is a group of workers, group B, which has an average productivity of $9 per hour. Suppose workers from group A have an average productivity of $15 per hour and that employers have a productivity test that is 100% accurate 1/3 of the time, but has no value 2/3 of the time. If a worker from group B took the same productivity test that was given to workers in group A, what is the best estimate of the VMP for this worker if his test score is $21 per hour?
A)$13
B)$18
C)$17
D)$21

Question

Quizplus · Accepted Answer

The test is only accurate 1/3 of the time, so the test score of $21 per hour is not reliable. The best estimate of the worker's VMP would be a weighted average of the known productivity levels: (1/3 * $21) + (2/3 * $9) = $13.

Imagine That There Is a Group of Workers, Group B