Asked by Pamela Hernandez on May 30, 2024
Verified
Refer to Scenario 14.4. Suppose that the price of the product rises to $5. Which of the following curves shifts?
A) MP curve
B) MRP curve
C) Supply of labor curve
D) Marginal expenditure curve
Marginal Product
The extra output that is produced by using one more unit of a variable input, holding other inputs constant.
Marginal Revenue Product
The additional revenue generated from employing one more unit of a resource or input.
Supply of Labor
The total hours that workers are willing and able to work at a given wage rate, in a given time period.
- Analyze the impact of product price changes on labor demand in monopsony and competitive markets.
Verified Answer
ZK
Zybrea KnightJun 01, 2024
Final Answer :
B
Explanation :
The MRP (Marginal Revenue Product) curve shifts when the price of the product changes because MRP is calculated as the marginal product (MP) of labor times the price of the product. Since the price of the product has risen from $2 to $5, the value of the marginal product increases, leading to a shift in the MRP curve. The MP curve, supply of labor curve, and marginal expenditure curve do not shift directly due to a change in the product's price.
Learning Objectives
- Analyze the impact of product price changes on labor demand in monopsony and competitive markets.