alleryStart learning →Substituting physical capital for labor in response to union wages results in increased:
AUnion membership
BProduct variety
CLabor productivity
DTotal employment
Answer & Solution
Correct answer: C. Labor productivity
1. Fewer workers with more equipment each produce more.
2. Firms may choose production methods that involve more physical capital and less labor.
3. That choice results in increased labor productivity.
4. Higher productivity is what can justify the higher wage to the firm.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 15 'Labor Markets and Income'_
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