📚 Learning Guide
Impact of Technology on Labor Demand
hard

A manufacturing company has recently implemented advanced automation technology, resulting in a significant increase in the productivity of its unskilled labor force. Which of the following statements best explains the impact of this technological change on the company's labor demand?

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Choose the Best Answer

A

The company will likely reduce its workforce because automation replaces the need for unskilled labor.

B

The company will increase its demand for unskilled labor because workers can now produce more output, increasing their marginal revenue product.

C

The company will keep its labor demand unchanged since technology does not affect the number of workers needed.

D

The company will only hire skilled labor in the future as technology makes unskilled roles obsolete.

Understanding the Answer

Let's break down why this is correct

Answer

When a manufacturing company uses advanced automation technology, it can produce more goods in less time. This means that the company can become more efficient and may not need as many workers to achieve the same level of production. However, if the automation allows unskilled workers to work faster or more effectively, it can actually increase the demand for labor because the company might expand its operations or produce more products. For example, if a factory uses robots for assembly, unskilled workers can focus on quality control or packaging, which could lead to hiring more people in those areas. Therefore, while automation can reduce the need for certain jobs, it can also create new opportunities and increase overall labor demand in different roles.

Detailed Explanation

With automation, workers can produce more in less time. Other options are incorrect because Many think automation means fewer workers are needed; Some believe technology doesn't change how many workers are needed.

Key Concepts

Impact of Technology on Labor Demand
Marginal Revenue Product
Productivity
Topic

Impact of Technology on Labor Demand

Difficulty

hard level question

Cognitive Level

understand

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