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In the context of a perfectly competitive model of the labour market, an increase in technology that raises the marginal product of labour at any given level of employment would be expected, in equilibrium, to a) reduce the amount of labour required to produce a given amount of output and hence increase unemployment. b) shift the labour demand curve outwards and lead to an increase in employment and wages. c) have no effect upon labour supply or labour demand curves and hence have no impact on employment or wages. d) reduce the supply of labour to the market and result in an increase in wages but a fall in employment

In the context of a perfectly competitive model of the labour market, an increase in technology that raises the marginal product of labour at any given level of employment would be expected, in equilibrium, to a) reduce the amount of labour required to produce a given amount of output and hence increase unemployment. b) shift the labour demand curve outwards and lead to an increase in employment and wages. c) have no effect upon labour supply or labour demand curves and hence have no impact on employment or wages. d) reduce the supply of labour to the market and result in an increase in wages but a fall in employment

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter13: Earnings, Productivity, And The Job Market
Section: Chapter Questions
Problem 11CQ
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In the context of a perfectly competitive model of the labour market, an increase in technology
that raises the marginal product of labour at any given level of employment would be expected, in
equilibrium, to
a) reduce the amount of labour required to produce a given amount of output and hence increase
unemployment.
b) shift the labour demand curve outwards and lead to an increase in employment and wages.
c) have no effect upon labour supply or labour demand curves and hence have no impact on
employment or wages.
d) reduce the supply of labour to the market and result in an increase in wages but a fall in
employment

Why the correct answer is B?

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