Which of the following will increase the marginal product of labor in the labor market?
A)An increase in the price level and the money wage.
B)An increase in the real wage.
C)A decrease in the capital stock.
D)An increase in the supply of labor.

Question

Quizplus · Accepted Answer

The marginal product of labor can increase if the real wage rate increases. This can happen due to an increase in labor productivity, which allows firms to pay higher wages while still being profitable. An increase in the price level and money wage (A) would only result in inflation and not impact the marginal product of labor. A decrease in the capital stock (C) would decrease the marginal product of labor as there would be fewer capital goods to work with. An increase in the supply of labor (D) would likely decrease the marginal product of labor as there would be more workers for firms to choose from, resulting in lower wages and productivity.

Which of the Following Will Increase the Marginal Product of Labor