Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases the participation rate as higher productivity attracts more workers.
B
It decreases the participation rate as fewer workers are needed for the same output.
C
It has no effect on the participation rate because productivity is independent of labor supply.
D
It causes fluctuations in the participation rate depending on the industry.
Understanding the Answer
Let's break down why this is correct
Answer
When productivity increases, it means that workers can produce more goods or services in the same amount of time. This higher productivity often leads to businesses needing more workers to keep up with the increased output, which can encourage more people to join the labor force. For example, if a factory becomes more efficient and produces more toys, the owner might hire additional workers to help meet demand. As a result, more people may decide to look for jobs because they see better opportunities available. Therefore, when productivity rises, it can lead to a higher labor force participation rate, assuming everything else stays the same.
Detailed Explanation
When productivity goes up, fewer workers are needed to produce the same amount of goods. Other options are incorrect because This answer suggests that more workers are needed when productivity rises; This option claims that productivity doesn't affect labor supply.
Key Concepts
Productivity
Labor force participation rate
Topic
Marginal Returns and Labor Supply
Difficulty
medium level question
Cognitive Level
understand
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