Assume that firms in an industry observe a 10% increase in the productivity of labor, but to get there they had to increase the cost of labor by 5%. What should be expected to happen in the output market as a result of this development?

The supply should increase

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

The supply should decrease

No worries! We‘ve got your back. Try BYJU‘S free classes today!

The supply should remain unchanged

No worries! We‘ve got your back. Try BYJU‘S free classes today!

The demand should increase

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A
The supply should increase

The 10% increase in productivity of labour will offset the increase in cost by 5%, leading to increase in supply at the exisiting production capacity.

Suggest Corrections

Similar questions

Q. Krishna Furnishers Mart started its operations in the year 1954 and emerged as the market leader in the industry because of their original designs and efficiency in operations. They had a steady demand for their products but over the years, they found their market share declining because of new entrants in the field. The firm decided to review their operations and decided that in order to meet the competition, they need to study and analyze the market trends and then design and develop their products accordingly. List any two impacts of changes in business environment on Krishna Furnishers Mart's operations. (Hint: increase in competition and Market orientation).

In November of 2010, the US Central Bank, the Federal Reserve, embarked on a policy of quantitative easing. Since this policy essentially represents an increase in the supply of money, it may create inflationary expectations. Let’s assume (and this is a strong assumption), that as a result of this polic y, US households start to expect inflation (price increases) in the housing market. The effect on the housing market will be:

Firms derive the demand for labor by determining the value of marginal product of labor, and it is based directly on market demand for the end product.

Suppose a marketer on conducting research found that he had 10% share in the market, then he can make a strategy to increase his share to 30% and then increasing the level of production plan or promoting a product, etc. What function of marketing is this?

Q. Competition between members of a prairie dog population could be expected to increase as a result of an increase in the

Assume that firms in an industry observe a 10% increase in the productivity of labor, but to get there they had to increase the cost of labor by 5%. What should be expected to happen in the output market as a result of this development?

The correct option is A The supply should increase The 10% increase in productivity of labour will offset the increase in cost by 5%, leading to increase in supply at the exisiting production capacity.

The correct option is A
The supply should increase

The 10% increase in productivity of labour will offset the increase in cost by 5%, leading to increase in supply at the exisiting production capacity.