Practicing Success
Which of the following are true- a) As long as the Value of Marginal Product of Labour(VMPL) is greater than the wage rate, the firm will earn more profit by hiring one more unit of labour. b) The demand curve for labour is downward sloping. |
Both a and b are true a is true, b is not b is true, a is not Both a and b are false |
Both a and b are true |
If the wage rate increases, VMPL should also increase. This is possible only if MPL increases which in turn implies that less labour should be employed owing to the diminishing marginal productivity of labour. |