The demand for labor increases when the:
A)real wage increases.
B)real wage decreases.
C)value of the marginal product of labor increases.
D)value of the marginal product of labor decreases.

Question

Quizplus · Accepted Answer

The demand for labor increases when the value of the output rises. Economists call this an increase in the "value of marginal product." Note that the quantity of labor demanded will increase when real wages decrease, however that describes a movement along a stationary demand for labor curve rather than a shift of the curve itself.

The Demand for Labor Increases When The