Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in the production of candles. This development
A)decreases the demand for workers who make candles and decreases their equilibrium wage.
B)increases the demand for workers who make candles and increases their equilibrium wage.
C)increases the supply of workers who make candles and decreases their equilibrium wage.
D)increases the supply of workers who make candles and increases their equilibrium wage.

Question

Quizplus · Accepted Answer

The new invention that leads to labor-augmenting technological progress in the production of candles will increase the productivity of workers who make candles. This will result in an increase in the demand for workers who make candles and an increase in their equilibrium wage as the market is assumed to be competitive.

Assume the Market for Candles Is Competitive