The amount of labor hired by a producer depends not only on the price of labor, but also on the price of machinery and other outputs.

Question

Quizplus · Accepted Answer

The price of machinery and other outputs can affect the productivity of labor and, therefore, the amount of labor hired by a producer. For example, if machinery becomes more affordable and efficient, the producer may be able to hire less labor to produce the same output. Alternatively, if the price of other outputs increases, the producer may choose to allocate more resources to producing those outputs, which could lead to a decrease in the amount of labor hired for other tasks.

The Amount of Labor Hired by a Producer Depends Not