Figure: The Value of the Marginal Product Curve
(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, the VMPL curve will shift to the right if:
A)the wage rate increases.
B)a technological advance makes labor more productive.
C)the price of the good decreases.
D)the wage rate decreases.

Question

Quizplus · Accepted Answer

A shift to the right of the VMPL curve indicates an increase in the marginal product of labor. A technological advance would increase the productivity of labor and therefore increase the marginal product, causing the curve to shift to the right. An increase in the wage rate (option A), a decrease in the price of the good (option C), or a decrease in the wage rate (option D) would not directly affect the marginal product of labor and therefore would not shift the VMPL curve.

Figure: the Value of the Marginal Product Curve