The graphs below depict the production function and labor market for an imaginary economy. The economy is, initially, at points x and X.
Figure 1 Figure 2
-An advance in technology will

Question

The graphs below depict the production function and labor market for an imaginary economy. The economy is, initially, at points x and X.
  Figure 1 Figure 2
-An advance in technology will

Quizplus · Accepted Answer

An advance in technology will shift the production function upward, as it allows for greater output with the same amount of inputs. This will lead to an increase in the marginal product of labor, causing the labor demand curve to shift to the right. The new equilibrium will be at a higher level of output and employment, represented by point Y.

The Graphs Below Depict the Production Function and Labor Market