According to classical growth theory, if labor productivity increases,
A) people save more, which increases the capital per hour even more, and so economic growth continues indefinitely.
B) the population grows and eventually real GDP returns to the subsistence level.
C) the population grows but more slowly than real GDP so that people's incomes are permanently higher.
D) the pursuit of profit causes further increases in capital per hour and technology and economic growth continues indefinitely.
E) the growth rate of real GDP per person permanently increases.
B
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Suppose workers at the bakery discover that a new firm making baseballs came to town and is offering higher wage rates. What will happen in the labor market for bakers?
a. The labor supply curve will shift to the right. b. Demand for bakers will increase because the MPP of bakers will decrease. c. The quantity supplied of labor will increase because the wage rate will decrease. d. The MRP of bakers will increase. e. The labor supply curve will shift to the left.