The MRP of labor will shift to the left if

Question

Quizplus · Accepted Answer

The MRP (marginal revenue product) of labor is the additional value produced by each additional unit of labor. It is affected by factors like labor productivity and wages. When productivity increases, MRP of labor shifts to the right, indicating a higher demand for labor. However, if labor productivity decreases, MRP of labor will shift to the left, indicating a lower demand for labor. Changes in wages will also affect MRP of labor, but the direction of shift will depend on whether wages increase or decrease. In this case, no information is given about changes in wages, so we cannot determine the direction of the shift based on that. Therefore, the best choice is B - labor productivity decreases, which will cause MRP of labor to shift to the left.

The MRP of Labor Will Shift to the Left If