Consider the labor market for computer programmers.During the late 1990s,the value of the marginal product of all computer programmers increased dramatically.Holding all else equal,what effect did this process have on the equilibrium wage in the labor market for computer programmers?

Question

Quizplus · Accepted Answer

The increase in the value of the marginal product of all computer programmers suggests that their contribution to the firms employing them has increased. If the demand for programmers remained constant or rose while the supply remained the same, the equilibrium wage should increase as firms would be willing to pay more for the same quantity of labor. Therefore, holding all else equal, the equilibrium wage in the labor market for computer programmers would increase as a result of the increase in the value of their marginal product.

Consider the Labor Market for Computer Programmers