As labour productivity is higher in the United States than Australia, this means that a. employers in the United States are willing to pay more for a given quantity of labour than Australian employers are. b. the production function in the United States is below that of Australia's. c. Australian workers will want to work less hours. d. real wages are higher in Australia.
Question
As labour productivity is higher in the United States than Australia, this means that
a. employers in the United States are willing to pay more for a given quantity of labour than Australian employers are.
b. the production function in the United States is below that of Australia's.
c. Australian workers will want to work less hours.
d. real wages are higher in Australia.
Solution
The correct answer is:
a. employers in the United States are willing to pay more for a given quantity of labour than Australian employers are.
Labour productivity refers to the amount of goods and services that a worker produces in a given amount of time. If labour productivity is higher in the United States than in Australia, it means that, on average, workers in the United States are more productive. This could make employers in the United States willing to pay more for a given quantity of labour, as they are getting more output per worker.
Options b, c, and d are incorrect. The production function being below that of Australia's would suggest lower, not higher, productivity. Workers wanting to work less hours or real wages being higher in Australia are not direct consequences of higher labour productivity in the United States.
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