An adverse supply shock,such as a reduced supply of raw materials,would
A)increase the marginal product of labour.
B)decrease the marginal product of labour.
C)decrease the marginal product of capital,but have no effect on the marginal product of labour.
D)not affect the marginal product of labour.

Question

Quizplus · Accepted Answer

An adverse supply shock, such as a reduced supply of raw materials, would decrease the marginal product of labour. This can happen because, with a decrease in raw materials, the cost of production increases, and firms may reduce their demand for labour or reduce the wages of workers. As a result, the marginal product of labour decreases.

An Adverse Supply Shock,such as a Reduced Supply of Raw