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Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,the VMPL curve will shift to the right if:
A) the wage rate increases.
B) a technological advance makes labour more productive.
C) the price of the good that the labour produces decreases.
D) the wage rate decreases.

Question

Use the following to answer questions :
Figure: The Value of the Marginal Product Curve 
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,the VMPL curve will shift to the right if:
A) the wage rate increases. 
B) a technological advance makes labour more productive. 
C) the price of the good that the labour produces decreases. 
D) the wage rate decreases.

Quizplus · Accepted Answer

The VMPL curve represents the additional output produced by an additional unit of labor, and its upward slope depicts the law of diminishing marginal returns. Technological advance increases labor productivity and shifts the VMPL curve to the right. A decrease in the wage rate would result in a movement along the existing VMPL curve, not a shift. Similarly, a decrease in the price of the good produced would not affect the VMPL curve directly.

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