Figure 18-7
-Refer to Figure 18-7.Assume W₁ = $20 and W₂ = $18 and the market is always in equilibrium.Then the shift of the labor supply curve from S₁ to S₂

Question

Figure 18-7 -Refer to Figure 18-7.Assume W₁ = $20 and W₂ = $18 and the market is always in equilibrium.Then the shift of the labor supply curve from S₁ to S₂

Quizplus · Accepted Answer

The shift of the labor supply curve from S₁ to S₂ leads to an increase in the quantity of labor supplied from Q1 to Q2. As a result, the wage rate paid to workers decreases from $20 to $18, and consequently, the value of the marginal product of labor decreases by $2. This is because the additional worker hired (at $18 wage rate) is less productive than the last worker employed (at $20 wage rate). Therefore, the correct answer is B.

Figure 18-7 -Refer to Figure 18-7.Assume W1 = $20 and W2 =

Figure 18-7 -Refer to Figure 18-7.Assume W₁ = $20 and W₂ =