Which of the following would increase labor productivity?
A) a decrease in the amount of capital per unit of labor
B) a change in technology that improves the quality of capital
C) a decrease in the unemployment rate
D) an increase in the number of inexperienced workers entering the labor force
E) a decrease in the quality of capital

Question

Quizplus · Accepted Answer

A change in technology that improves the quality of capital, such as introducing new and more efficient machines or tools, will increase labor productivity by enabling workers to produce more output with less effort and time. Decreasing the amount of capital per unit of labor (option A) or decreasing the quality of capital (option E) will have the opposite effect and may lower productivity. An increase in the number of inexperienced workers entering the labor force (option D) may also lower productivity as they may require more training and supervision, but a decrease in the unemployment rate (option C) could potentially increase productivity as it suggests a tighter labor market with more job opportunities and competition for workers. However, this option may not always hold true if the decrease in unemployment is due to discouraged workers leaving the labor force instead of finding employment.

Which of the Following Would Increase Labor Productivity