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7 July, 09:53

What is the impact of an increase in worker productivity when demand is relatively more elastic?

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  1. 7 July, 11:34
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    The revenue of the firm will increase.

    Explanation:

    An increase in worker productivity will cause an increase in the level of output as the firm will be able to produce more by using the same amount of labor.

    The supply of the curve will move to the right. The supply of the firm will increase. This will cause a decrease in the price of the product.

    If the demand is relatively more elastic, the proportionate decrease in price will cause a more than proportionate increase in the demand for the product.

    As a result, the total revenue of the firm will increase.
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