question archive State true or false and justify your answer: If the demand for a good shifts out (increases), then the labor demand of a monopolist in that industry will increase

State true or false and justify your answer: If the demand for a good shifts out (increases), then the labor demand of a monopolist in that industry will increase

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State true or false and justify your answer:

If the demand for a good shifts out (increases), then the labor demand of a monopolist in that industry will increase.

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The statement is true.

Reason: When the demand of monopolist increases, both the average revenue curve and the marginal revenue curve will shift to the right. The marginal cost remaining constant, when the marginal revenue curve increases, the marginal revenue will intersect the marginal cost curve at a greater quantity of output. This increase in output in the short run by the monopolist can be produced by increasing the variable inputs of productions. Since labor constitute an important variable unit of production, the increase in output will require greater units of labor. As a result of which the demand for labor will increase.