If the MRP of Ann is greater than her wage while the MRP of Ben is less than his wage rate; economists would predict that overtime:
A) Ann's wage will fall, while Ben's will stagnate.
B) Ann's wage will fall, while Ben's will fall.
C) Ann's wage will increase, while Ben's will stagnate.
D) Ann's wage will increase, while Ben's will fall.

Question

Quizplus · Accepted Answer

Ann's wage is likely to increase because her marginal revenue product (MRP) is higher than her wage, indicating she generates more value than she costs, making it profitable for employers to raise her wage to retain her. Ben's wage is likely to fall because his MRP is lower than his wage, indicating he costs more than the value he generates, leading employers to reduce his wage or replace him.

If the MRP of Ann Is Greater Than Her Wage