If the marginal product of labor increases because of a shift of the MP curve, that will likely cause
A)an increase in the price of output produced by labor
B)an increase in labor demand
C)an increase in labor supply
D)a fall in the wage paid to labor
E)a fall in the number of workers employed

Question

Quizplus · Accepted Answer

An increase in the marginal product of labor means that each additional unit of labor is producing more output. This will lead to an increase in labor demand, as firms will want to hire more workers to produce more output. It may also lead to an increase in the wage paid to labor, as firms are willing to pay more for each additional unit of output. However, it is not likely to cause an increase in the price of output produced by labor or an increase in labor supply, and it will not lead to a fall in the number of workers employed.

If the Marginal Product of Labor Increases Because of a Shift