If labor productivity increases

Question

Quizplus · Accepted Answer

If labor productivity increases, it means that workers are producing more output per hour worked. This could lead to an increase in demand for labor, as firms try to take advantage of the more productive work force to produce more goods and services. The other choices are not necessarily true: labor costs could stay the same or even decrease if the increased productivity leads to lower overall costs; some workers may be displaced if their jobs become redundant, but others may be hired to work on new projects or to develop new products; jobs may relocate if the cost of living or doing business becomes too high, but this is not inevitable.

If Labor Productivity Increases