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Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the market wage rate increases:
A) the VMPL curve will shift to the right.
B) the profit-maximizing quantity of labor will increase.
C) the VMPL curve will shift to the left.
D) the profit-maximizing quantity of labor will decrease.

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Use the following to answer questions:
Figure: The Value of the Marginal Product Curve 
-(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the market wage rate increases:
A) the VMPL curve will shift to the right. 
B) the profit-maximizing quantity of labor will increase. 
C) the VMPL curve will shift to the left. 
D) the profit-maximizing quantity of labor will decrease.

Quizplus · Accepted Answer

If the market wage rate increases, the cost of hiring additional labor increases, leading firms to hire less labor to maximize profit, thus decreasing the profit-maximizing quantity of labor.

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