Employers will hire more units of a resource if the
A) price of the resource increases.
B) productivity of the resource increases.
C) price of the good being produced declines.
D) price of a complementary resource rises.

Question

Quizplus · Accepted Answer

Employers will hire more units of a resource if the productivity of the resource increases. This is because an increase in productivity means that each unit of the resource can produce more output, which makes it more valuable to the employer. Hiring more units of this resource to increase productivity will allow the firm to produce more output, and ultimately increase profits. The other options are not necessarily true as they could lead to a decrease in profits (higher resource prices or lower prices of the good being produced) or create a substitute for the resource (higher prices of a complementary resource).

Employers Will Hire More Units of a Resource If the