'Labour productivity' increases when capital stock per person falls, as there is a trade-off between capital and labour.

Question

Quizplus · Accepted Answer

The statement is incorrect. Labour productivity generally increases when there is a higher capital stock per person, as this enables workers to use more advanced technology and tools to be more efficient and produce more output. The trade-off between capital and labour occurs when there is an imbalance in the ratio of capital to labour, such as having too much capital and not enough workers to operate it, or vice versa.

'Labour Productivity' Increases When Capital Stock Per Person Falls, as There