Question

If the real wage falls the:a. marginal cost of labor falls.b. firm will hire additional labor.c. marginal benefit of the worker decreases.d. All of the above.e. A and B only.

Answer 1

Answer: The correct answer is "D. All of the above".

Explanation:

Marginal cost of labor: It is the additional cost of hiring an additional worker. Normally the workers' salary is the same, so the marginal cost of labor will always be the same.

The correct answer is "D" because if the real wage falls, the cost of hiring a worker for the company is lower, therefore companies will hire additional workers.

And if workers' wages decrease, their marginal benefit also decreases because they will have less income.