Question

In the 1980s, the dangerous Ebola virus entered the United States through contaminated monkeys that were imported for use in medical experiments. Suppose this virus had not been contained but had spread to the general population. Assume that the virus is lethal in half of the people who are exposed to it. Describe the resulting effect on labor productivity.

Answer 1

Solution-

There are two possible effects on Labour Productivity -

1. People would be absent from work if they caught the virus (but did not die) and so marginal productivity would be higher for the remaining workers.

2. People who caught the virus would die, the labor supply would decrease, and the remaining workers would have a higher marginal product of labor. While the marginal productivity of the remaining workers increases, total output would constantly fall.