If the price of a good increases, then in the market for the type of labor needed to produce this good,
A)employment will decrease.
B)the labor supply will increase.
C)the marginal product (MP)of labor will increase.
D)the marginal revenue product (MRP)of labor will increase.

Question

Quizplus · Accepted Answer

When the price of a good increases, the marginal revenue product (MRP) of labor, which is the additional revenue generated by employing one more unit of labor, also increases. This is because MRP is calculated as the marginal product (MP) of labor multiplied by the price of the good. If the price of the good rises, even if MP remains constant, the MRP will increase because each unit of labor is now producing goods that are sold at a higher price, generating more revenue.

If the Price of a Good Increases, Then in the Market