Suppose the price of capital and labor remain constant but that the average educational level of workers has increased and therefore, productivity of labor increases.This would lead a firm
A)to adopt a more capital-intensive production technology.
B)to adopt a more labor-intensive technology.
C)to keep its output and production technology unchanged, but to use fewer units of labor.
D)to use only labor to produce the product.

Question

Quizplus · Accepted Answer

An increase in labor productivity due to higher education levels makes labor more efficient, encouraging the firm to adopt a more labor-intensive technology to take advantage of the improved productivity.

Suppose the Price of Capital and Labor Remain Constant but That