Labor-augmenting technology causes which of the following? (i) The marginal productivity of labor increases.
(ii) The marginal productivity of labor decreases.
(iii) Labor demand shifts to the right.
(iv) Labor demand shifts to the left.

Question

Labor-augmenting technology causes which of the following? (i)	The marginal productivity of labor increases.
(ii)	The marginal productivity of labor decreases.
(iii)	Labor demand shifts to the right.
(iv)	Labor demand shifts to the left.

Quizplus · Accepted Answer

Labor-augmenting technology means that the efficiency of labor is enhanced, leading to an increase in the marginal productivity of labor. As a result, the demand for labor shifts to the right as firms seek to employ more labor at the same or higher wages due to the increased productivity. Therefore, option (i) and (iii) are correct, and options (ii) and (iv) are incorrect.

Labor-Augmenting Technology Causes Which of the Following? (I) the Marginal Productivity