A firm's marginal revenue product curve is downward sloping, which means the derived demand curve for an input is downward sloping.

Question

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The marginal revenue product (MRP) curve shows the additional revenue generated by each additional unit of an input. Since the law of diminishing marginal returns holds, as a firm hires more of a particular input (such as labor), the MRP of that input will eventually decrease. As a result, the derived demand curve for the input (which shows the quantity of the input demanded at each price) will also be downward sloping.

A Firm's Marginal Revenue Product Curve Is Downward Sloping, Which