ACCA Advanced Performance Management (APM) Practice Exam

When a firm experiences an increase in labor productivity as a result of purchasing new machines, it means that each worker can produce more output in the same amount of time. This enhanced productivity often leads to a reevaluation of staffing needs.

If the new machines enable existing workers to produce more efficiently and effectively, the firm might not need as many staff members to achieve the same or greater output. Therefore, instead of hiring more labor, which is the option provided, the natural response could lean towards either maintaining the current workforce or even reducing it if the output has significantly increased.

However, the opportunity created by increased output might lead the firm to explore new markets or increased production levels. In such cases, the option to increase hiring could be considered, but realistically, the immediate reaction to increased productivity due to new technology typically aligns with the reduction of labor or optimization of the current workforce rather than an increase. Hence, the scenario presented likely results in a reduced need for labor, as existing employees can now handle more production thanks to the new machines.