-Refer to the Diagram Above

question 31

Multiple Choice

-Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3?

• A) as wages increase over this range, the quantity of hours worked also increases.
• B) as wages increase over this range, the quantity of hours worked changes very little.
• C) as wages increase of this range, the quantity of hours worked is more inelastic.
• D) as wages increase over this range, the quantity of hours worked actually decreases.

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Definitions:

Marginal Revenue Product

The supplementary revenue created by the addition of one unit of a production input.

Product Price

The amount of money charged for a product or service, determined by cost, demand, and supply factors.

Labor

The exertion of both mental and physical capabilities towards the creation of products and services.

Marginal Revenue Product

Extra profits generated by incorporating another unit of a production element.