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

Question

Quizplus · Accepted Answer

When the productivity of labor increases, firms are more likely to adopt a more labour-intensive technology because labor becomes more efficient, making it more cost-effective to produce using increased labor input compared to capital.

Suppose the Price of Capital and Labour Remain Constant but That