Warehouse Automation Tools
The question
The competitive labor market for warehouse workers in the town of Kesswell is in equilibrium. Distribution firms in Kesswell install new handheld sorting devices that let each worker pack noticeably more orders per hour. Assume the price of the firms' output and the number of people willing to work are unchanged. Show the effect on the labor market for warehouse workers. Show the effect on the Labor Market graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Warehouse Automation Tools: the worked answer
On the Labor Market graph, Labor demand (DL) shifts right.
Why Labor demand (DL) shifts right
In a competitive labor market the demand for labor is the marginal revenue product of labor, which equals the marginal product of labor times the price of the output. The new sorting devices raise each worker's marginal product, so with the output price held constant every worker's MRP rises and firms are willing to hire more workers at every wage. The devices do not change how many people are willing to work at each wage, so the labor supply curve stays put.
What happens to the equilibrium
The equilibrium market wage rises and the level of employment increases.
The mistake students make on this one
Many students shift labor demand LEFT because the stem mentions automation and they assume machines replace workers. Here the devices are held BY the workers and raise each worker's output per hour, so capital is a complement that raises MRP, not a substitute that displaces labor.
On exam day
Ask one question of any technology stem: does the machine do the worker's job (substitute, labor demand left) or make the worker better at their job (complement, labor demand right)? The wording of the stem always tells you which.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Labor demand (DL) shifts right and every other curve on the Labor Market graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
More Labor Market scenarios
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