Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L 2
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
Q - W
L
-The government raises the minimum wage.Which graph reflects this situation?
A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)Graph E

Question

Use the following information to answer the questions that follow.
Nicky L,owner of NLD Incorporated,knows that the marginal product of labor (MPL)for his workers can be defined as follows:
MPL = 32 - L
The total output a given level of workers can produce is found as:
Q = 32L - L 2 
He also knows that the price of his output is $3.His profits can be found as:
Profit = P
  Q - W
  L
-The government raises the minimum wage.Which graph reflects this situation?     
A)Graph A 
B)Graph B 
C)Graph C 
D)Graph D 
E)Graph E

Quizplus · Accepted Answer

The minimum wage increase will increase the wage cost for the firm, resulting in a decrease in the profit-maximizing level of labor. This means that the quantity of labor will decrease, which will result in a leftward shift of the MPL curve. As a result, the firm's total output will decrease, and the profit-maximizing level of labor will decrease. This situation is reflected in graph C, where the MPL curve shifts leftward, resulting in a decrease in the profit-maximizing level of labor.

Use the Following Information to Answer the Questions That Follow