Other things being equal,which of the following would increase the market demand for labor?
A)A fall in the wage rate.
B)An increase in the marginal productivity of labor.
C)A decrease in the cost-effectiveness of labor relative to other inputs.
D)A decrease in the market demand for the firm's output.

Question

Quizplus · Accepted Answer

An increase in the marginal productivity of labor would increase the demand for labor. This is because if each worker can produce more output, the firm would want to hire more workers to increase production. The other choices would decrease the demand for labor: A fall in the wage rate would make hiring workers cheaper, but it would also imply that workers are less productive or that the firm's revenue is decreasing, making it less likely for the firm to hire more workers. C (a decrease in the cost-effectiveness of labor relative to other inputs) would make hiring workers more expensive relative to other inputs, leading the firm to substitute away from labor. D (a decrease in the market demand for the firm's output) would lower the firm's revenue, making it less likely for the firm to hire more workers.

Other Things Being Equal,which of the Following Would Increase the Market