An increase in the number of workers hired by a firm could result from
A)a decrease in the marginal product of labor.
B)a decrease in the marginal revenue product of labor.
C)an increase in the real wage.
D)a decrease in the real wage.

Question

Quizplus · Accepted Answer

When the real wage decreases, it becomes cheaper for the firm to hire more workers, thus increasing the number of workers hired. A decrease in the marginal product or revenue product of labor would make it less profitable to hire additional workers and lead to a decrease in the number of workers hired. An increase in the real wage would make it more expensive to hire workers and also lead to a decrease in the number of workers hired.

An Increase in the Number of Workers Hired by a Firm