The MRP of labor will shift to the right if

Question

Quizplus · Accepted Answer

When labor productivity increases, the MRP (Marginal Revenue Product) of labor also increases. This is because firms are able to generate more revenue with each additional unit of labor they hire, which increases the demand for labor and shifts the MRP of labor to the right. Conversely, a decrease in labor productivity would result in a decrease in the MRP of labor. Changes in wages alone do not necessarily indicate a shift in the MRP of labor.

The MRP of Labor Will Shift to the Right If