Both wages and employment can increase at the same time as long as the:

Question

Quizplus · Accepted Answer

When the marginal revenue product of labor increases, it means that the additional output produced by each additional worker is generating more revenue for the firm. This allows the firm to pay employees higher wages while still increasing employment, since the increased output is offsetting the increased labor costs. Therefore, both wages and employment can increase at the same time as long as the marginal revenue product of labor increases.

Both Wages and Employment Can Increase at the Same Time