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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.
A) decrease; increase
B) increase; decrease
C) decrease; decrease
D) increase; increase

Question

Use the following to answer questions:
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.
A) decrease; increase 
B) increase; decrease 
C) decrease; decrease 
D) increase; increase

Quizplus · Accepted Answer

An increase in labor productivity typically increases the demand for labor, leading to a higher equilibrium quantity of labor and a higher equilibrium wage (price of labor).

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