Exhibit 26-1

-Refer to Exhibit 26-1. For this firm, the demand curve for factor X is

Question

Exhibit 26-1
  ​
-Refer to Exhibit 26-1. For this firm, the demand curve for factor X is

Quizplus · Accepted Answer

The demand curve for a factor of production, like factor X, is typically downward-sloping. This reflects the law of diminishing returns, where as more of a factor is used, holding other factors constant, its marginal product (and thus its marginal revenue product) decreases. This leads to a lower willingness to pay for additional units, creating a downward-sloping demand curve.

Exhibit 26-1 ​

Exhibit 26-1