Other things being equal, which of the following would increase the market demand for labor?
A) A fall in the wage rate.
B) An increase in the marginal productivity of labor.
C) A decrease in the cost-effectiveness of labor relative to other inputs.
D) A decrease in the market demand for the firm's output.

Question

Quizplus · Accepted Answer

An increase in the marginal productivity of labor would directly result in an increase in the demand for labor, as firms would be willing to hire more workers to produce more output to take advantage of the higher productivity of labor. A fall in the wage rate (option A) would not necessarily increase the demand for labor as it depends on the elasticity of demand for the product. Option C is not relevant as it does not affect the demand for labor. Option D would decrease the demand for labor as firms would produce less output, resulting in less need for labor.

Other Things Being Equal, Which of the Following Would Increase