Figure 18-6
-Refer to Figure 18-6.Assume W₁ = $20 and W₂ = $22 and the market is always in equilibrium.Then the shift of the labor demand curve from D₁ to D₂

Question

Figure 18-6 -Refer to Figure 18-6.Assume W₁ = $20 and W₂ = $22 and the market is always in equilibrium.Then the shift of the labor demand curve from D₁ to D₂

Quizplus · Accepted Answer

When the labor demand curve shifts to the right from D₁ to D₂, the equilibrium wage rate increases from $20 to $22. This implies that the value of the marginal product of labor has increased by $2. Therefore, the correct answer is (A) - it increases the value of the marginal product of labor by $2.

Figure 18-6 -Refer to Figure 18-6.Assume W1 = $20 and W2 =

Figure 18-6 -Refer to Figure 18-6.Assume W₁ = $20 and W₂ =