Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂ = $18, and the market is always in equilibrium. A shift of the labor supply curve from S₁ to S₂ would A)increase the value of the marginal product of labor by $2. B)decrease the value of the marginal product of labor by $2. C)decrease the value of the marginal product of labor by more than $2. D)not change the value of the marginal product of labor.

Question

Quizplus · Accepted Answer

A shift of the labor supply curve from S1 to S2 indicates an increase in labor supply, which typically leads to a decrease in the equilibrium wage rate. Since the value of the marginal product of labor is equal to the wage rate in equilibrium, a decrease in the wage rate by $2 would decrease the value of the marginal product of labor by $2.

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $20 and W2

Figure 18-7 -Refer to Figure 18-7. Assume W₁ = $20 and W₂