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The introduction of a new technology that increases the productivity of labour will:Group of answer choicesincrease the supply of labourdecrease the supply of labourdecrease the demand for labourincrease the demand for labour

Question

The introduction of a new technology that increases the productivity of labour will:Group of answer choicesincrease the supply of labourdecrease the supply of labourdecrease the demand for labourincrease the demand for labour

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Solution

The introduction of a new technology that increases the productivity of labour will increase the demand for labour. Here's a step-by-step explanation:

  1. When a new technology is introduced that increases labour productivity, it means that each worker can produce more output in the same amount of time.

  2. This increase in productivity makes each worker more valuable to the firm, as they can now produce more goods or services than before.

  3. As a result, firms will want to hire more workers to take advantage of this increased productivity. This is because the marginal product of labour (the additional output produced by hiring one more worker) has increased.

  4. Therefore, the demand for labour increases. This is represented by a rightward shift of the labour demand curve in a supply and demand model of the labour market.

  5. It's important to note that this doesn't necessarily mean the supply of labour will change. The supply of labour is determined by factors like the working-age population and people's willingness to work at different wage rates. The introduction of new technology doesn't directly affect these factors.

So, the introduction of a new technology that increases the productivity of labour will increase the demand for labour.

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