If technological change is "labor augmenting," then
A)output per worker declines,output per unit of capital increases.
B)"effective labor input" increases,output per unit of capital declines.
C)output per worker increases,output per unit of capital is constant.
D)Both output per worker and output per unit of capital change.

Question

Quizplus · Accepted Answer

When technological change is labor-augmenting, it increases the productivity of labor. This means that the output per worker increases, but the output per unit of capital remains constant, as the technology is not directly affecting the capital stock. Therefore, the correct option is C, where output per worker increases, but output per unit of capital is constant.

If Technological Change Is "Labor Augmenting," Then