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

Question

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

Quizplus · Accepted Answer

A shift in the labor supply curve from S1 to S2 would cause the equilibrium wage to decrease from $20 to $18. As a result, the value of the marginal product of labor would also decrease, because firms are willing to pay less for each additional unit of labor. Therefore, the correct choice is B, which states that the value of the marginal product of labor would decrease by $2.

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