I came upon a practice question on passmaster that shows MRP going up then down for the labor market… is this possible? I thought MRP curve sloped down no matter what because of law of dim r…
MRP slopes upwards at first and peaks MR=0, then starts to fall down. Diminishing returns sets in
MRP slopes upwards at first and peaks MR=0, then starts to fall down.
MRP = MP * MR If you recall MP first increases then decreases… assuming MR doesnt offset MP change, MRP could go up then down… It raises one more doubt… MRP is also the demand curve for a factor… can we assume the same thing for demand curve as well?
yeah that’s why i was confused… because MRP is also the demand curve for a factor