Sia
Question
Statistics
Posted 8 months ago
If all factors of production besides labor are held constant, then what happens in an economy if output increases?
Choose 1 answer:
(A) The level of technology increases
(B) Employment decreases
(C) Unemployment decreases
(D) Capital increases
(E) Capital decreases
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Answer from Sia
Posted 8 months ago
Solution by Steps
step 1
Consider the scenario where all factors of production besides labor are held constant, and output increases
step 2
If output increases while other factors are constant, it implies that labor productivity has increased
step 3
An increase in labor productivity without changes in technology suggests that more labor is employed
step 4
With more labor being employed, unemployment would decrease
Answer
C
Key Concept
Labor Productivity and Employment
Explanation
When labor productivity increases, it typically leads to more employment, thereby reducing unemployment, assuming all other factors remain constant.
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