If a producer who hires labor in a competitive labor market decides to purchase a new technology that allows each worker to produce twice as much output as before, we would expect the labor demand curve to shift to the _______ and wages to _______.

Question

Quizplus · Accepted Answer

The labor demand curve would shift to the right because the new technology increases productivity, making each worker more valuable. As a result, the firm is willing to hire more workers at each wage level. Wages would increase because the higher productivity makes workers more valuable to the employer, leading to higher demand for labor, which pushes wages up.

If a Producer Who Hires Labor in a Competitive Labor