If there is an increase in the equilibrium wage, there must have been an increase in the value of the marginal product of labour.

Question

Quizplus · Accepted Answer

According to the marginal productivity theory, the demand for labor and the wage rate are determined by the marginal product of labor. Therefore, an increase in the equilibrium wage implies that the value of the marginal product of labor has increased.

If There Is an Increase in the Equilibrium Wage, There