Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 12 - The Demand for Resources - Questions - Page 263: 2c

Answer

The new labor demand is less elastic. MRP falls because of diminishing returns. Decreases in wage rates have smaller increases in quantity of labor demanded.

Work Step by Step

This question asks you to think of marginal benefits, with diminishing returns there is gradual decreases in returns. The wage rates will cause the curve for Quantity of Labor demanded to diminish.
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