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Microeconomics
Posted 9 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) Capital decreases
(B) Employment decreases
(C) Unemployment decreases
(D) Capital increases
(E) The level of technology increases
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Answer from Sia
Posted 9 months ago
Solution
a
Definition of Factors of Production: Factors of production are inputs used in the production of goods and services, including labor, capital, land, and technology
b
Holding Factors Constant: When all factors of production except labor are held constant, any change in output is attributed to changes in labor
c
Relationship Between Labor and Output: If output increases while other factors are constant, it implies that more labor is being employed
d
Impact on Employment: Increased employment leads to a decrease in unemployment
Answer
(C) Unemployment decreases
Key Concept
Relationship between labor and output
Explanation
When output increases with all other factors held constant, it indicates that more labor is being employed, which reduces unemployment.
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