Technological progress helps increase the productivity of labor, defined as the number of units of output produced per hour of labor. A rise in the productivity of labor in the production process, ceteris paribus, will cause
A) the demand for the output to increase.
B) the demand for the output to decrease.
C) the supply of the output to increase.
D) the supply of the output to decrease.
E) None of the above is correct.

Question

Quizplus · Accepted Answer

An increase in labor productivity, with all other factors being equal (ceteris paribus), means that each hour of labor can produce more output. This generally leads to an increase in the supply of the output because the production process becomes more efficient, allowing more of the product to be made in the same amount of time or the same amount with less time.

Technological Progress Helps Increase the Productivity of Labor, Defined as the Number