If the price of a good increases, then in the market for the type of labor needed to produce this good,
A. employment will decrease.
B. the labor supply will increase.
C. the marginal product (MP) of labor will increase.
D. the marginal revenue product (MRP) of labor will increase.
Answer: D. the marginal revenue product (MRP) of labor will increase.
As the price of the good increases, the marginal revenue product of labor increases.
Marginal revenue product of labor = Marginal product of labor * Marginal revenue of good.
With increase in price , marginal revenue of good also increases and that will lead to increase in marginal revenue product of labor.
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