Question

Technological progress helps increase the productivity of labor, defined as the number of units of output produced per hour of labor. A rise in the productivity of labor in the production process, ceteris paribus, will cause A) the demand for the output to increase. B) the demand for the output to decrease. C) the supply of the output to increase. D) the supply of the output to decrease. E) None of the above is correct.

Answer 1

Answer:

The correct answer is letter "C": the supply of the output to increase.

Explanation:

The example provides a directly proportional relationship between the productivity labor and the output produced which implies talking about the supply law -one variable increases when the other does, and one variable decreases when the other does the same. Thus, an increase in the productivity of labor will be interpreted as an increase in the output produced.