If new capital increases labor productivity, the supply of labor ________ and the demand for labor ________.

Question

Quizplus · Accepted Answer

New capital increases labor productivity, which typically increases the demand for labor as firms want to utilize the new capital efficiently. However, the supply of labor itself does not automatically change just because of an increase in productivity; it stays the same in the immediate term.

If New Capital Increases Labor Productivity, the Supply of Labor