An increase in the demand for automobiles will increase the demand for the labor used to produce the automobiles due to a(n)_____
A)increase in the marginal revenue product of labor.
B)decrease in the marginal revenue product of labor.
C)increase in the marginal revenue product of automobiles.
D)decrease in the marginal revenue product of automobiles.
E)decrease in the average revenue of labor.

Question

Quizplus · Accepted Answer

An increase in the demand for automobiles will lead to an increase in the marginal revenue product of labor, as firms will want to hire more workers to produce more automobiles to meet the higher demand. This increase in demand for the labor used to produce the automobiles directly relates to the increase in demand for the product.

An Increase in the Demand for Automobiles Will Increase the Demand