Suppose a permanent technological improvement raises labor's marginal productivity.Whether or not workers own capital,we can conclude that

Question

Quizplus · Accepted Answer

An increase in labor's marginal productivity will lead to an increase in the demand for labor, raising the equilibrium wage rate. Therefore, the correct choice is A. B and C are incorrect as they suggest a decrease in employment and an increase in supply, respectively. D is incorrect as an increase in productivity leads to an increase in demand, not a decrease.

Suppose a Permanent Technological Improvement Raises Labor's Marginal Productivity