Figure: Equilibrium in the Labor Market
(Figure: Equilibrium in the Labor Market) In the figure Equilibrium in the Labor Market, an increase in the productivity of labor, when everything else stays the same, will lead to a(n) in the
Equilibrium quantity of labor and a(n) in the equilibrium price of labor.

Question

Quizplus · Accepted Answer

An increase in labor productivity typically leads to an increase in the demand for labor, as firms are willing to hire more workers at any given wage. This results in an increase in both the equilibrium quantity of labor and the equilibrium price (wage) of labor.