As labor productivity increases,which of the following shifts in the labor market should occur?
A)Supply of labor should shift to the left.
B)Demand for labor should shift to the left.
C)Supply of labor should shift to the right.
D)Demand for labor should shift to the right.

Question

Quizplus · Accepted Answer

Labor productivity measures the amount of output produced by each unit of labor input. As productivity increases, firms are able to produce more output with the same amount of labor. This creates a greater demand for labor, as firms will need to hire more workers to keep up with the increased output. Therefore, the demand for labor should shift to the right. The supply of labor would not be affected by changes in productivity, as it represents the willingness and ability of individuals to work, which is not directly related to productivity.

As Labor Productivity Increases,which of the Following Shifts in the Labor