How will an increase in labor productivity affect equilibrium in the labor market?

Question

Quizplus · Accepted Answer

An increase in labor productivity means that workers can produce more output per hour of work, which makes the labor more productive and valuable to employers. As a result, demand for labor will increase as employers will seek to hire more workers to produce more output. With the increase in demand, the equilibrium wage and quantity of labor will increase as well. Option A is incorrect because labor supply is not affected by labor productivity. Option B is incorrect because an increase in demand for jobs would result in an increase in the equilibrium wage rate, but it would not necessarily increase the quantity of labor. Option D is incorrect because an increase in labor productivity would not lead to a decrease in demand for labor, as explained earlier.

How Will an Increase in Labor Productivity Affect Equilibrium in the Labor