Figure 18-7
-Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Question

Figure 18-7 
-Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in equilibrium. A shift of the labor supply curve from S1 to S2 would

Quizplus · Accepted Answer

When the labor supply curve shifts to the right from S1 to S2, the equilibrium wage rate decreases from W1 to W2. The value of the marginal product of labor (VML) would decrease by the amount of the wage decrease, which is $3 (W1 - W2). Therefore, the correct answer is B, which states that the VML would decrease by $3.

Figure 18-7 -Refer to Figure 18-7. Assume W1 = $15 and W2