In a perfectly competitive labor market, what will be the impact of an increase in labor productivity on equilibrium wages and employment? Design a diagram to support your answer.
Labor Demand and Supply Curves:
The labor demand curve shows the relationship between the wage rate and the quantity of labor demanded. On the contrary, the labor supply curve depicts a connection between the wage rate and the quantity of labor supplied.
Answer and Explanation: 1
An improvement in labor productivity will lead to a rise in the marginal product of labor and thus cause a rightward change in the labor demand curve....
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fromChapter 2 / Lesson 6
In microeconomics, shifts in supply and demand curves occur due to changes in demand and supply for goods or services caused by different factors like changes in consumers' disposable income. Determine the microeconomic shift factors of supply and demand curves, and understand their impact on equilibrium and prices paid by consumers.