The marginal productivity of labour:
A)Increases when the price of the good sold increases, ceteris paribus
B)Decreases when there is an adverse supply shock, ceteris paribus
C)Increase when more workers are hired, ceteris paribus
D)Decreases when there is an increase in the quantity of capital, ceteris paribus

Question

Quizplus · Accepted Answer

An adverse supply shock can reduce the productivity of labor by making it harder for workers to produce goods, thus decreasing marginal productivity.

The Marginal Productivity of Labour