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Question
Macroeconomics
Posted 10 months ago
The Merchant of Tennis is a firm that produces tennis balls. The only variable input for this firm is labor.
What would cause the Merchant of Tennis' total product of labor curve to shift up?
Choose 1 answer:
(A) a decrease in its amount of capital
(B) an increase in labor
(c) a decrease in natural resources
(D) a decrease in labor
(E) an increase in its amount of capital
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Answer from Sia
Posted 10 months ago
Solution
a
Total Product of Labor Curve: The total product of labor curve represents the total output produced by a firm as a function of the quantity of labor employed, holding all other factors constant
b
Factors Affecting the Curve: An increase in the amount of capital (while holding labor constant) can lead to an upward shift in the total product of labor curve because it enhances the productivity of labor
c
Incorrect Options: A decrease in the amount of capital, a decrease in natural resources, or a decrease in labor would not cause the total product of labor curve to shift up. These changes would likely decrease productivity or the total product of labor
d
Correct Option: An increase in the amount of capital, such as better machinery or more tools, would allow workers to produce more tennis balls per unit of labor, thus shifting the total product of labor curve upward
Answer
(E) an increase in its amount of capital
Key Concept
Capital-labor productivity relationship
Explanation
An increase in capital improves labor productivity, leading to an upward shift in the total product of labor curve for a firm.
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