How Will an Increase in Labor Productivity Affect Equilibrium in the Labor

question 88

Multiple Choice

How will an increase in labor productivity affect equilibrium in the labor market?

• A)The supply of labor will increase and the equilibrium wage and quantity of labor will increase.
• B)The demand for jobs will increase and the equilibrium wage and quantity of labor will increase.
• C)The demand for labor will increase and the equilibrium wage and quantity of labor will increase.
• D)The demand for labor will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labor will decrease.

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Definitions:

Cash Flows

Refers to the total amount of money being transferred into and out of a business, especially affecting liquidity.

Years

Units of time equal to 365 days (or 366 days in a leap year), often used as a measure of time for financial, operational, or strategic planning.

Interest Rate

The rate a borrower pays to a lender for using assets, expressed in terms of the principal's percentage.

Borrow

The act of receiving something from someone with the intention of returning it or its equivalent after a period of time.