Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The workers are now able to produce more output per hour.
B
The wage rate has decreased significantly.
C
The firm has decided to reduce the number of workers.
D
There is a decrease in consumer demand for the product.
Understanding the Answer
Let's break down why this is correct
Answer
When a firm experiences an increase in marginal revenue product due to improved technology, it means that each worker can produce more valuable goods or services. This happens because the new technology makes work more efficient, allowing employees to use their time and skills better. As a result, the firm sees higher profits from the products made by each worker, which leads them to want to hire more workers or pay higher wages. For example, if a factory introduces a new machine that helps workers produce twice as many toys in a day, the increase in productivity raises the value of each worker's output. Therefore, the firm demands more labor because the improved technology has made each worker's contribution more valuable.
Detailed Explanation
With better technology, workers can make more products in the same time. Other options are incorrect because A lower wage might seem good, but it doesn't directly increase how much workers can produce; Cutting workers usually means less production, not more.
Key Concepts
Marginal Revenue Product
Labor Demand
Technological Improvement
Topic
Marginal Revenue Product Analysis
Difficulty
easy level question
Cognitive Level
understand
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