When productivity increases, the demand for labor typically shifts to the right because firms are more willing to hire additional workers to meet the increased output. This shift is primarily influenced by the concept of _________.

When productivity increases, it means that workers can produce more goods or services in the same amount of time. This higher output makes firms more efficient and profitable, so they start to look for more workers to help meet the growing demand for their products. The concept that explains this shift in labor demand is called "marginal productivity. " It refers to the additional output generated by hiring one more worker. For example, if a bakery invests in a new oven that allows bakers to make twice as many loaves of bread in a day, the bakery will likely hire more bakers to take advantage of this increased capacity.