Figure 18-5
-Refer to Figure 18-5. Assume W₁ = $15 and W₂ = $11, and the market is always in equilibrium. A shift of the labor supply curve from S₂to S₁ would

Question

Figure 18-5 -Refer to Figure 18-5. Assume W₁ = $15 and W₂ = $11, and the market is always in equilibrium. A shift of the labor supply curve from S₂to S₁ would

Quizplus · Accepted Answer

The shift of the labor supply curve from S₂ to S₁, given the equilibrium wages before and after the shift ($11 to $15), indicates an increase in the value of the marginal product of labor by $4. This is because the wage rate in a competitive labor market reflects the value of the marginal product of labor, and an increase in the wage rate from $11 to $15 suggests that the value of the marginal product of labor has increased by $4.

Figure 18-5 -Refer to Figure 18-5. Assume W1 = $15 and W2

Figure 18-5 -Refer to Figure 18-5. Assume W₁ = $15 and W₂