As more efficient capital equipment becomes available, the demand for labor will ________, the real wage will ________, and the quantity of labor hired will ________.

Question

Quizplus · Accepted Answer

When more efficient capital equipment becomes available, it typically increases productivity. This can lead to an increase in the demand for labor as firms may need more workers to operate or complement the new equipment. As the demand for labor increases, the real wage tends to increase as well because employers are willing to pay more to attract or retain the necessary workforce. Consequently, the quantity of labor hired also increases as firms expand their operations or increase production to leverage the new, more efficient capital equipment.

As More Efficient Capital Equipment Becomes Available, the Demand for Labor