If wage rates rise, ceteris paribus:

Name: If wage rates rise, ceteris paribus:
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Question

Quizplus · Accepted Answer

When wage rates rise, ceteris paribus (all other factors being held constant), the marginal resource cost (MRC) of labor increases because it costs more to hire an additional worker. This does not necessarily mean that the marginal revenue product (MRP) of labor must rise or that more workers will find jobs. In fact, higher wages could lead to a reduction in the quantity of labor demanded by employers.

If Wage Rates Rise, Ceteris Paribus