If a firm uses new technology that increases its demand for labor,the firm's demand for labor curve
A) shifts leftward.
B) shifts rightward only if the demand for labor is elastic.
C) shifts rightward no matter if the demand for labor is elastic or inelastic.
D) does not shift, but there is a movement along it.
E) shifts rightward only if the demand for labor is inelastic.

Question

Quizplus · Accepted Answer

When a firm uses new technology that increases its demand for labor, it means that the marginal productivity of labor has increased. This will result in a shift of the demand for labor curve to the right, indicating an increase in the quantity of labor demanded at any given wage rate. This shift is independent of whether the demand for labor is elastic or inelastic as the increase in demand is due to the increase in marginal productivity of labor.

If a Firm Uses New Technology That Increases Its Demand