Figure 10.2 Figure 10.2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.
-Refer to Figure 10.2.Suppose the market price of bracelets falls to $2.What happens to the curve given in the diagram?

Question

Figure 10.2  Figure 10.2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.
-Refer to Figure 10.2.Suppose the market price of bracelets falls to $2.What happens to the curve given in the diagram?

Quizplus · Accepted Answer

If the market price of bracelets falls to $2, then the MRP curve for Becca's Baubles will shift to the left. This is because the MRP curve represents the value that each additional worker adds to the production process, and if the price of the product falls, then the value of each additional worker also falls. This would lead to a lower MRP for each unit of labor, and therefore a shift to the left in the MRP curve.

Figure 102 Figure 10