Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print.If the market wage rises to $70,then the:

Question

Quizplus · Accepted Answer

The demand for labor is determined by the marginal revenue product (MRP) of labor, which is the additional revenue a firm generates from hiring an additional worker. In this case, the MRP is equal to the marginal product of labor (MPL) multiplied by the price of the output (which is $10 per print). Assuming that MPL does not change, an increase in the market wage rate from $60 to $70 would increase the cost of hiring workers, thereby reducing the MRP of labor. As a result, the firm would reduce the quantity demanded of labor (i.e., hire fewer workers) in order to equate the MRP with the wage rate. However, this would not cause a shift in the demand curve for labor, since the MRP curve (which determines the demand for labor) has not shifted.

Phil's Copy Studio Pays Its Workers $60 Per Day and Sells