A change in total factor productivity will ________, which ________.
A) change the demand for labor; shifts the labor demand curve
B) decrease the demand for labor; shifts the labor demand curve out
C) increase the supply of labor; shifts the labor demand curve
D) change the demand for labor; shifts labor supply
E) reduce the marginal product of labor; moves the wage down along the labor demand curve

Question

Quizplus · Accepted Answer

A change in total factor productivity (TFP) would shift the labor demand curve, but not the labor supply curve. An increase in TFP would lead to an increase in demand for labor, as firms could produce more output with the same level of inputs. This would shift the labor demand curve to the right. Conversely, a decrease in TFP would lead to a decrease in demand for labor, shifting the labor demand curve to the left. Therefore, choice A is the correct answer, as it correctly identifies that a change in TFP would affect the demand for labor and shift the labor demand curve.

A Change in Total Factor Productivity Will ________, Which ________

A Change in Total Factor Productivity Will , Which