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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,if the price of the good increases and everything else stays the same,then the profit-maximizing quantity of labour:
A) will increase.
B) will decrease.
C) will stay the same.
D) cannot be determined.

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,if the price of the good increases and everything else stays the same,then the profit-maximizing quantity of labour:
A) will increase. 
B) will decrease. 
C) will stay the same. 
D) cannot be determined.

Quizplus · Accepted Answer

When the price of the good increases, the value of the marginal product of labor also increases. This means that each additional unit of labor is now more productive and generates more revenue for the firm. As a result, the profit-maximizing quantity of labor will increase as the firm will want to hire more workers to take advantage of the higher productivity and the higher price.

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