Can an increase in the wage rate cause the value of the marginal product of labor...
Can an increase in the wage rate cause the value of the marginal product of labor (VMPL) to decrease?
Please explain.
Homework Answers
Value of marginal product of labor depends upon the price of the product and number of units of the product, produced by that additional labor employed. When wage rate increases, then it has to be matched by the VMPL so that optimum condition is achieved. It makes firms to hire less workers and pay higher wages as per the increased wage rate and it makes VMPL to be at a higher level to create a balance with the higher wages paid to the workers.
So, increase in the wage rate,
causes less workers to be hired, pushing VMPL to the upward
direction or make it increase, rather than decrease.
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Can an increase in the wage rate cause the value of the marginal
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