Labor productivity rises

Question

Quizplus · Accepted Answer

Labor productivity rises when the amount of capital per worker increases. This is because workers have access to more and better tools and equipment, which allows them to produce more output in a given amount of time. Hiring more workers (A) without increasing capital per worker would lead to diminished returns to labor, and productivity may not rise. Similarly, decreasing the amount of capital per worker (B) would lead to lower productivity. Technological progress (D) can also lead to productivity gains, but it is not the only factor.

Labor Productivity Rises